LOS ANGELES - B. Riley Financial, Inc. (NASDAQ: RILY), a diversified provider of financial services, has finalized a transaction involving the sale of its brand assets, which has generated approximately $236 million in cash proceeds. The deal included the transfer and contribution of intellectual property related to multiple brands to a securitization vehicle, resulting in $189 million in net proceeds for B. Riley.
The subsidiary bebe stores, inc. also sold its interests in the assets and intellectual property of the bebe and Brookstone brands, acquiring about $47 million in net cash proceeds at the closing of the transaction.
Through this strategic move, B. Riley aims to pay down its outstanding senior secured debt and improve its balance sheet. The company acquired the portfolio of brands for roughly $222 million and realized $179 million in distributions during its period of ownership.
Chairman and Co-Chief Executive Officer of B. Riley Financial, Bryant Riley, expressed gratitude towards the Bluestar Alliance team for their operational excellence in repositioning the brands. He also indicated that the company is transitioning from asset monetization to focusing on growth within its core financial services operations, with an eye on the small- and mid-cap markets.
B. Riley Financial plans to offer further details on its growth strategies in the upcoming quarterly earnings call. The company also anticipates the sale of a majority stake in Great American Group by late November as part of its strategic realignment.
Legal advisory services for the transaction were provided by Sullivan & Cromwell LLP.
This news is based on a press release statement from B. Riley Financial, which is known for delivering tailored solutions across various stages of the business life cycle. The company's affiliated subsidiaries offer comprehensive financial services, including investment banking, brokerage, and wealth management.
The press release also contains forward-looking statements that involve risks and uncertainties. B. Riley Financial has advised that these statements are based on current management expectations and that actual results could differ materially from those projected.
In other recent news, B. Riley Financial, Inc. has announced a series of strategic financial moves. The company declared it will pay cash dividends on two series of its Preferred Stock, demonstrating its commitment to shareholder returns. B. Riley has also entered into a $386 million agreement with Oaktree Capital Management, leading to the formation of Great American Holdings, LLC. This move is expected to close in the fourth quarter of 2024.
In addition, B. Riley has announced significant financial changes, including restructuring its debt and repaying approximately $85.9 million of its term loans. The company has also appointed Brendon Philipps as Managing Director at B. Riley Securities, a subsidiary of B. Riley Financial, to lead their Capital Structure Advisory and Liability Management efforts.
Despite an estimated net loss between $435 million to $475 million for the second quarter of 2024 due to non-cash impairment charges and write-downs, B. Riley maintained an operating adjusted EBITDA between $50 million to $55 million. These are the recent developments that have been shaping the trajectory of B. Riley Financial, Inc.
InvestingPro Insights
The recent asset sale by B. Riley Financial (NASDAQ: RILY) comes at a critical time for the company, as reflected in the latest InvestingPro data. With a market capitalization of $170.56 million, RILY's stock has experienced significant volatility, aligning with an InvestingPro Tip that notes the stock "generally trades with high price volatility."
The company's financial health has been under pressure, as evidenced by its negative gross profit margin of -1.24% in the last twelve months as of Q1 2024. This supports another InvestingPro Tip stating that RILY "suffers from weak gross profit margins." The strategic sale of brand assets for $236 million could provide much-needed liquidity to address these challenges.
Despite these headwinds, RILY maintains a strong dividend policy. The company boasts a remarkable dividend yield of 35.52%, reflecting its commitment to shareholder returns. An InvestingPro Tip highlights that RILY "has maintained dividend payments for 11 consecutive years," showcasing its dedication to providing value to investors even in challenging times.
Investors seeking a more comprehensive analysis can access additional insights through InvestingPro, which offers 6 more tips for RILY, providing a deeper understanding of the company's financial position and market performance.
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