B. Riley Financial, Inc. has reported in a recent SEC filing that the company's Chairman and Co-CEO, Bryant R. Riley, has pledged more shares as collateral for a loan than previously disclosed. The additional pledged shares were self-reported by Mr. Riley to the Board of Directors, prompting an internal investigation.
The investigation, assisted by independent counsel Winston & Strawn LLP, revealed that a total of 5,804,124 shares had been pledged by Mr. Riley to Axos Bank, in contrast to the 4,389,553 shares reported in the company's proxy statement on May 10, 2024. The discrepancy also affects prior proxy statements from 2020 and 2023, as well as Form 10-K amendments filed in April 2024 and April 2020.
The Board of Directors, with Mr. Riley and Tom Kelleher, Co-Chief Executive Officer, recusing themselves, has unanimously approved the Audit Committee's recommendations for remedial and personnel actions. These measures aim to ensure adherence to company policies and accurate disclosures in public filings.
B. Riley Financial, headquartered in Los Angeles, CA, is listed on the Nasdaq Global Market under the ticker RILY. The company also has several series of preferred stock and senior notes listed on the Nasdaq.
In other recent news, B. Riley Financial has concluded a transaction involving the sale of its brand assets, generating approximately $236 million in cash proceeds. This strategic move is aimed at improving the company's balance sheet and paying down its senior secured debt. B. Riley also plans to sell a majority stake in Great American Group as part of its strategic realignment.
The company has announced a series of financial changes, including the restructuring of its debt and repayment of approximately $85.9 million of its term loans. 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.
B. Riley has entered into a $386 million agreement with Oaktree Capital Management, resulting in the formation of Great American Holdings, LLC. This deal is expected to close in the fourth quarter of 2024. The company has also declared it will pay cash dividends on two series of its Preferred Stock, demonstrating its commitment to shareholder returns.
B. Riley Securities, a subsidiary of B. Riley Financial, has appointed Brendon Philipps as Managing Director to lead their Capital Structure Advisory and Liability Management efforts. These recent developments are shaping the trajectory of B. Riley Financial, Inc.
InvestingPro Insights
In light of B. Riley Financial's recent disclosure issues, investors may find value in examining additional financial metrics and insights. According to InvestingPro data, B. Riley's market capitalization stands at $184.2 million, reflecting the market's current valuation of the company amidst these challenges.
InvestingPro Tips highlight that B. Riley pays a significant dividend to shareholders, with a current dividend yield of 31.5%. This high yield could be attractive to income-focused investors, but it's important to note that the company has seen a 50% dividend growth decline in the last twelve months. Additionally, B. Riley has maintained dividend payments for 11 consecutive years, demonstrating a historical commitment to shareholder returns despite recent setbacks.
The company's stock has experienced significant volatility, with InvestingPro data showing a 20.95% price return over the last month, contrasting sharply with an 80.95% decline over the past year. This volatility aligns with the InvestingPro Tip indicating that the stock generally trades with high price volatility, which may be further exacerbated by the recent governance concerns.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into B. Riley Financial's current situation and future prospects.
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