B. Riley Financial (NASDAQ: RILY) stock rose nearly 2% in pre-market trading Tuesday following the announcement of a private bond exchange to reduce its debt.
The diversified financial services firm revealed it had entered into a privately negotiated exchange agreement with an institutional investor, which will lower its total outstanding debt by approximately $12 million.
As part of the deal, the investor will exchange around $22 million in outstanding Senior Notes for $10 million in newly issued 8.00% Senior Secured Second Lien Notes, maturing on January 1, 2028.
Additionally, the company will issue warrants to the investor, granting the option to purchase approximately 40,000 common shares at an exercise price of $10.00 per share. These warrants will be exercisable for seven years from the issuance date.
Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial (NASDAQ: RILY), said the exchange is a key step in strengthening the company’s capital structure and improving its balance sheet. He added that the company plans to use the remaining capacity under its Senior Secured Second Lien facility for further debt-reduction transactions.
Moelis & Company LLC served as the financial advisor, while Sullivan & Cromwell LLP provided legal counsel to BRF regarding the Agreement.
