B. Riley Financial Secures $236 Million in Cash Proceeds from Brands Assets

Rhea-AI Summary

B. Riley Financial (NASDAQ: RILY) and its subsidiary bebe stores have completed a brand assets transaction generating $236 million in cash proceeds. The deal involved transferring interests in multiple brand licenses including Hurley, Justice, and Scotch & Soda to a securitization vehicle for $189 million, while bebe sold its interests in bebe and Brookstone brands for $47 million. B. Riley had originally acquired the brand portfolio (excluding bebe and Brookstone) for $222 million and received $179 million in distributions during ownership. The company plans to use proceeds to reduce senior secured debt and deleverage its balance sheet. Additionally, B. Riley expects to sell a majority stake in Great American Group in late November.

Positive

• Secured $236 million in total cash proceeds from brand assets sale
• Received $179 million in distributions during brand portfolio ownership
• Transaction proceeds will be used to reduce senior secured debt
• Strategic deleveraging of balance sheet

Negative

• Divesting significant brand portfolio assets acquired for $222 million

Insights

Financial Analyst

This significant transaction represents a major deleveraging event for B. Riley Financial. The $236 million cash proceeds from brand asset sales, combined with the previous $179 million in distributions during ownership, demonstrates strong asset monetization with total returns exceeding the initial $222 million investment. The strategic timing of this sale, alongside the upcoming Great American Group stake sale, signals a pivotal shift in B. Riley's business model.

The debt reduction focus through these proceeds will strengthen the balance sheet and improve financial flexibility. The company's transition to core financial services operations, particularly targeting small- and mid-cap markets, suggests a more focused business strategy. This restructuring could lead to improved operational efficiency and potentially higher margins in their core competency areas.

LOS ANGELES, Oct. 29, 2024 /PRNewswire/ -- B. Riley Financial, Inc. (NASDAQ: RILY) ("B. Riley" or the "Company"), a diversified financial services company, today announced it and its subsidiary bebe stores, inc. ("bebe") have completed a transaction for their brand assets yielding approximately $236 million in cash proceeds to B. Riley.

At the closing of the transaction, B. Riley transferred and contributed its interests in the assets and intellectual property related to the licenses of several brands, including Hurley, Justice, Scotch & Soda, Catherine Malandrino, English Laundry, Joan Vass, Kensie, Limited Too and Nanette Lepore to a securitization vehicle, receiving approximately $189 million in net proceeds in connection with the financing transaction. bebe sold its interests in the assets and intellectual property related to the licenses of the bebe and Brookstone brands for approximately $47 million in net cash proceeds also at the closing.

B. Riley acquired the portfolio of brands (excluding bebe and Brookstone) for approximately $222 million and received $179 million in distributions during its ownership. The Company plans on utilizing the proceeds from this transaction to pay down outstanding senior secured debt and deleverage its balance sheet.

Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial said, "We appreciate the partnership we have had with the Bluestar Alliance team over the past several years. Joseph Gabbay and Ralph Gindi are incredible operators, and have done a tremendous job re-positioning these brands."

Mr. Riley continued, "With the completion of this transaction and the expected sale of a majority stake in Great American Group in late November, we are moving from a period of asset monetization to a renewed focus on growth in our core financial services operating businesses. There remains a huge opportunity in the small- and mid-cap markets, and we believe B. Riley is uniquely positioned to meet this demand. We look forward to providing investors with an update on our plans on our next quarterly earnings call."

Advisors
Sullivan & Cromwell LLP served as legal advisor to B. Riley.

About B. Riley Financial
B. Riley Financial is a diversified financial services company that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. B. Riley leverages cross-platform expertise to provide clients with full service, collaborative solutions at every stage of the business life cycle. Through its affiliated subsidiaries, B. Riley 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. B. Riley opportunistically invests to benefit its shareholders, and certain affiliates originate and underwrite senior secured loans for asset-rich companies. B. Riley 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 that 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. 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 in B. Riley Financial's Quarterly Reports on Form 10-Q for the period ended March 31, 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

Media
press@brileyfin.com

 

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SOURCE B. Riley Financial

FAQ

How much cash did B. Riley Financial (RILY) receive from the brand assets transaction?

B. Riley Financial received approximately $236 million in total cash proceeds, with $189 million from brand licenses securitization and $47 million from bebe's sale of bebe and Brookstone brands.

What will B. Riley Financial (RILY) do with the proceeds from the brand assets sale?

B. Riley Financial plans to use the proceeds to pay down outstanding senior secured debt and deleverage its balance sheet.

Which brands were included in B. Riley Financial's (RILY) asset transaction?

The transaction included brands such as Hurley, Justice, Scotch & Soda, Catherine Malandrino, English Laundry, Joan Vass, Kensie, Too, Nanette Lepore, bebe, and Brookstone.