In a significant development for B. Riley Financial Inc., the company has secured fresh capital to replace its existing loan from Nomura Holdings Inc., signaling a potential turning point in its financial restructuring efforts. The new funding, provided by Oaktree Capital Management LP, will retire the remaining debt from Nomura and offer B. Riley greater financial flexibility. This move comes as the firm continues to navigate through challenging times following a series of losses and asset sales. Shares of B. Riley surged more than 25% in New York trading, reflecting investor optimism about the company's future.

Details of the Financial Restructuring

In the heart of a bustling financial market, B. Riley Financial Inc. has taken a crucial step toward stabilizing its operations. The Los Angeles-based brokerage and investment firm has successfully arranged a new $160 million senior secured debt facility with Oaktree Capital Management LP, led by Howard Marks. This deal not only retires the syndicated loan previously held by Nomura but also provides much-needed working capital for the company. Approximately $118 million was allocated to settle the Nomura loan, while the remainder will be used for operational needs, including up to $35 million dedicated to a joint venture overseeing the liquidation of Joann, a bankrupt fabric and crafts retailer.

The new financing agreement offers B. Riley a three-year term with an interest rate tied to the three-month secured overnight financing rate (SOFR) plus 8%. Additionally, Oaktree has received warrants to purchase approximately 1.8 million B. Riley common shares, representing a 6% stake in the company. This arrangement underscores Oaktree's willingness to support distressed firms and reflects its confidence in B. Riley's turnaround strategy. Notably, this is the second time within a year that Oaktree has stepped in to assist B. Riley, having previously acquired a majority stake in its Great American valuation business.

The previous Nomura loan, which initially provided B. Riley with around $600 million in borrowing power, became a source of concern due to its association with Franchise Group Inc. (FRG), a retail conglomerate. FRG, founded by Brian Kahn, faced declining business performance, leading to its bankruptcy filing in November. This downturn cast doubt on the value of FRG shares pledged as collateral. As conditions worsened, Nomura demanded repayment and imposed stricter terms. Ultimately, B. Riley wrote off nearly its entire investment in FRG, marking a significant setback.

Despite these challenges, B. Riley and its chairman, Bryant Riley, have been actively working on a comprehensive turnaround plan. The new funding from Oaktree represents a critical milestone in this effort, providing the firm with the resources needed to execute various strategic initiatives. Moving forward, B. Riley aims to leverage this newfound financial stability to rebuild its position in the competitive financial services industry.

From a journalistic perspective, this development highlights the resilience of companies facing financial distress. It demonstrates how strategic partnerships and timely financial interventions can play a pivotal role in steering a company back on track. For investors and stakeholders, it serves as a reminder of the importance of adaptability and foresight in navigating turbulent economic landscapes. As B. Riley embarks on its next chapter, the focus will undoubtedly be on executing its turnaround plan and restoring shareholder confidence.