B. Riley Financial Announces Private Bond Exchange to Reduce Debt by Approximately $46 Million

Rhea-AI Summary

B. Riley Financial (NASDAQ: RILY) has announced a significant private bond exchange agreement that will reduce its total debt by approximately $46 million. Under the agreement, an institutional investor will exchange approximately $139 million in outstanding Senior Notes ($30M in March 2026 notes, $75M in December 2026 notes, and $35M in January 2028 notes) for $93 million in newly issued 8.00% Senior Secured Second Lien Notes due January 2028. The deal includes warrants for approximately 372,000 common shares at a $10.00 exercise price, valid for seven years. This exchange represents the company's largest to date, eliminating over $100 million in 2026 maturities and marking the third bond exchange that has collectively reduced total outstanding debt by about $93 million.

Positive

• Debt reduction of $46 million through the bond exchange
• Elimination of over $100 million in near-term 2026 debt maturities
• Total debt reduction of $93 million through three recent bond exchanges
• Extension of debt maturity to 2028 for a portion of the debt

Negative

• Issuance of warrants for 372,000 shares represents potential dilution for existing shareholders
• New notes carry a relatively high 8.00% interest rate
• Company still maintains significant debt load despite reduction

Insights

Financial Restructuring Specialist

B. Riley's $46M debt reduction and maturity extension improves near-term liquidity but comes with dilution risk through warrant issuance.

This bond exchange represents a critical deleveraging move for B. Riley, reducing total debt by $46 million through a discounted exchange of $139 million in existing notes for $93 million in new secured notes. The transaction's mechanics reveal important insights about the company's financial position.

The exchange eliminates over $100 million in 2026 maturities, which significantly improves B. Riley's near-term liquidity profile. This is the third and largest bond exchange the company has executed recently, bringing their total debt reduction to approximately $93 million. The pattern of multiple exchanges suggests an ongoing strategy to systematically improve their balance sheet outside of traditional refinancing channels.

The terms of this exchange warrant careful examination. The new 8.00% Senior Secured Second Lien Notes extend maturity to January 2028, but B. Riley had to offer security and warrants to incentivize the institutional investor - clear signs of constrained capital market access. The issuance of warrants for approximately 372,000 common shares at $10.00 per share introduces potential equity dilution over the seven-year exercise period.

Most tellingly, the exchange occurred at a significant discount (approximately 33%), with $139 million in debt being exchanged for $93 million in new notes. This discount suggests the market was valuing B. Riley's unsecured debt well below par, indicating material concerns about the company's credit quality. The engagement of Moelis & Company as financial advisor further points to the complexity and strategic importance of this transaction.

Exchange Eliminates More than $100 Million in 2026 Maturities

LOS ANGELES, May 21, 2025 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY) ("BRF" or the "Company"), a diversified financial services company, today announced it has entered into a privately negotiated exchange agreement (the "Agreement") with an institutional investor, which will reduce the Company's total outstanding debt by approximately $46 million.

Pursuant to the Agreement and subject to the completion of certain closing procedures, the investor has agreed to exchange approximately $139 million in outstanding Senior Notes, consisting of $30 million in March 2026 notes, $75 million in December 2026 notes and $35 million in January 2028 notes, for $93 million in newly issued 8.00% Senior Secured Second Lien Notes due January 1, 2028 (the "Notes"). In addition, the Company is issuing to the investor warrants to purchase an aggregate of approximately 372,000 common shares at an exercise price of $10.00 per share. The warrants are exercisable for a period of seven years from the issuance date.

Bryant Riley, Chairman and Co-Chief Executive Officer of BRF, said: "We've made significant progress addressing our capital structure over the past several months as we've negotiated three bond exchanges to reduce our total outstanding debt by approximately $93 million. The exchange announced today represents our largest to date and eliminates more than $100 million in 2026 maturities, representing a significant reduction in near-term debt and an important step forward for B. Riley. We expect to opportunistically utilize the remaining capacity under our Senior Secured Second Lien facility to further improve our balance sheet."

Moelis & Company LLC acted as financial advisor and Sullivan & Cromwell LLP acted as legal advisor to BRF with respect to the Agreement.

No Offer or Solicitation

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall it constitute an offer to sell, solicitation or sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful.

About B. Riley Financial

B. Riley Financial (BRF) is a diversified financial services company that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. BRF leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its subsidiaries and affiliated entities, BRF provides end-to-end financial services across investment banking, institutional brokerage, private wealth and investment management, financial consulting, corporate restructuring, operations management, risk and compliance, due diligence, forensic accounting, litigation support, appraisal and valuation, auction, and liquidation services. BRF opportunistically invests to benefit its shareholders, and certain affiliates originate and underwrite senior secured loans for asset-rich companies. BRF refers to B. Riley Financial, Inc. and/or one or more of its subsidiaries or affiliates. For more information, please visit www.brileyfin.com.

Forward-Looking Statements

Statements made in this press release that are not descriptions of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition, and stock price could be materially negatively affected. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of today's date. All statements other than statements of historical fact are forward-looking statements and include the completion of the closing procedures related to the exchange. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's performance or achievements to be materially different from any expected future results, performance, or achievements. Forward-looking statements speak only as of the date they are made and the Company assumes no duty to update forward-looking statements, except as required by law. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, some of which are beyond the control of the Company, including, but not limited to, the risks described from time to time in the Company's periodic filings with the SEC, including, without limitation, the risks described in the Company's 2023 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2024 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and the Company undertakes no duty to update this information.

Contacts
Investors
ir@brileyfin.com

Mike Frank
VP Corporate Development & Investor Relations
mfrank@brileyfin.com

Media
press@brileyfin.com 

 

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SOURCE B. Riley Financial

FAQ

How much debt will RILY reduce through its latest bond exchange?

B. Riley Financial will reduce its total outstanding debt by approximately $46 million through this latest bond exchange agreement.

What are the terms of RILY's new Senior Secured Second Lien Notes?

The new notes are 8.00% Senior Secured Second Lien Notes due January 1, 2028, totaling $93 million.

How many warrants is RILY issuing as part of the bond exchange?

RILY is issuing warrants to purchase approximately 372,000 common shares at an exercise price of $10.00 per share, exercisable for seven years.

How much has RILY reduced its total debt through recent bond exchanges?

Through three recent bond exchanges, B. Riley Financial has reduced its total outstanding debt by approximately $93 million.

What amount of 2026 debt maturities is being eliminated through this exchange?

The exchange eliminates more than $100 million in 2026 maturities, consisting of $30 million in March 2026 notes and $75 million in December 2026 notes.