B. Riley Financial entered into a new $160 million senior secured debt facility provided by funds managed by Oaktree Capital Management.
B. Riley used approximately $118 million to retire the outstanding debt under its Nomura Senior Secured Credit Agreement and the rest for working capital, including up to $35 million in respect of its portion of the loan and investment in the joint venture overseeing the liquidation of JOANN, the fabric and crafts retailer that is commencing store closing sales at all 790 locations nationwide.
On February 26, 2025, GA Group, in which B. Riley has a 44 percent ownership interest, was recognized as the successful bidder to serve as JOANN's exclusive agent to monetize substantially all of JOANN's assets pursuant to an auction approved by the U.S. Bankruptcy Court for the District of Delaware. The liquidation, which includes approximately $2 billion in retail inventory and is one of the largest transactions in GA Group's 40-year history, is expected to be completed in approximately 12 weeks.
Bryant Riley, Chairman and Co-Chief Executive Officer of B. Riley Financial, commented: "Our new credit agreement with Oaktree represents an important step forward for B. Riley and an extension of our relationship with Oaktree following last year's establishment of the GA Group. The new three-year facility provides us with greater financial and strategic flexibility, and allows us to execute a number of other initiatives."
Riley concluded, "Notably, the participation in the JOANN liquidation demonstrates the early success of our partnership with Oaktree to form GA Group, a leading asset disposition, valuation, appraisal and real estate services firm, with extensive expertise in large-scale retail liquidations. The successful bid in a competitive bankruptcy process showcases the potential of this business with the additional support and backing of Oaktree. B. Riley stands to benefit as an investor in the liquidation and indirectly through our equity stake in GA Group. We are pleased to remain a minority investor and active participant in GA Group and look forward to continuing to benefit from the upside potential of this business."
The Term Loan Facility carries an interest rate equal to the three-month secured overnight financing rate ("SOFR") plus 8.00%. In addition, the Company issued to Oaktree warrants to purchase an aggregate of 1,832,290 common shares (representing approximately 6% of the outstanding common stock) at an exercise price of $5.14 per share, a 20 percent premium to the 30-day VWAP prior to the issuance of the warrants. The warrants are exercisable for a period of seven years from the issuance date.
As previously announced, B. Riley will be reporting preliminary full year 2024 results on Monday, March 3 after the market close. The Company will host a conference call followed by a question-and-answer session with analysts and investors at 4:30 p.m. ET on the same day. Investors may access the live audio webcast and archived recording at https://ir.brileyfin.com/events-and-presentations.
Sullivan & Cromwell LLP served as legal advisor to B. Riley, and Kirkland & Ellis LLP served as legal advisor to Oaktree.