The Murky Outlook For B. Riley Financial's Baby Bonds

2025-02-10 12:40:01 ET

Summary

• B. Riley Financial suspended dividends on preferred shares, saving $8.60 million annually, following a prior suspension of common dividends to save $67.25 million yearly.
• The firm's ability to remain a going concern is threatened, with bondholders awaiting fiscal 2024 third-quarter and fourth-quarter earnings for clarity on coupon payments.
• RILY faces significant debt maturities in 2026, with baby bonds trading at significant discounts, reflecting market concerns about the company's financial health.

B. Riley Financial ( RILY ) made a significant decision in January to suspend its dividend to its two outstanding preferreds; the 6.875% Series A Cumulative Preferreds ( RILYP ) and the 7.375% Series B Cumulative Preferreds ( RILYL ). The decision came at an odd time considering the firm was spending just $2.15 million per quarter on dividend payments to its preferred shareholders. Hence, the move to suspend payments to the preferreds will save just $8.60 million per year and comes on the back of an earlier decision to halve, then entirely, suspend dividend payments to its common shareholders in a move that would ultimately save RILY $67.25 million per year. RILY previously shelled out $160 million a year on common dividend payments when it paid a $1 per share quarterly dividend. While the bonds sit higher up the capital structure, RILY now seemingly looks to be in a managed collapse that has dimmed the outlook of the baby bonds....

Read the full article on Seeking Alpha

For further details see: