(Bloomberg) — B. Riley Financial Inc. suspended dividends on a pair of its preferred shares, holding off on cash payments to some investors while it prepares to pay off another set of notes coming due next month.
The deferral affects B. Riley’s 6.875% Series A and 7.375% Series B preferred stock, according to a statement Monday. The unpaid dividends will continue accruing until they’re paid in full. Meanwhile, the company plans to redeem its 6.375% notes maturing Feb. 28 on schedule.
Chairman Bryant Riley has put a priority on paying down debt as his firm seeks to recover from a string of losses and writedowns on soured investments. The biggest was the November bankruptcy of Franchise Group, a collection of retail brands that was among B. Riley’s biggest holdings. A bankruptcy judge has said Franchise Group’s equity appears to be worthless.
“The preferred dividend was not suspended to preserve cash,” according to a representative for B. Riley, who declined to elaborate on the reasons. Common shares of B. Riley fell about 2.5% to $4.88 at midday in New York, after sagging as much as 7.4%. They briefly topped $40 in April 2024.
Overdue Numbers
B. Riley has repeatedly missed deadlines for filing financial results, with third-quarter results still overdue, and its shares risked being delisted by Nasdaq. The firm has said it expects to avoid that outcome. Last year, bankers began demanding more oversight of B. Riley’s finances, including regular updates on liquidity and cutbacks on borrowing.
An update released Jan. 14 — the first look investors have had into the company’s official financials in more than six months — said the company had $257 million in cash on hand at the end of 2024, including funds to pay off the notes due next month. A regulatory filing showed there was enough liquidity to suffice for at least the next 12 months.
The filing for the period ended June 30 also showed B. Riley suffered a second-quarter loss of more than $435 million, as revenue shrank to $148 million from $406 million a year earlier.
The company and Riley have been responding to subpoenas from the US Securities and Exchange Commission on topics ranging from its dealings with Franchise Group, transactions in an unrelated public company’s securities and a personal loan to Riley secured by his pledge of common stock, according to the midyear filing.
Riley and his firm are cooperating with the investigation, and no charges have been lodged against them.
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