Studying the B Riley (RILY) situation tonight and noticed they were supposed to have a NASDAQ filing made by 12/5/2024 relative to a plan of getting financial statements up to date–wow we are almost a month past that date and ‘crickets’. The company hasn’t filed a 10-Q quarterly report for the last 2 quarters–none filled since 4/2024 when the 10-K was filed for the year ending 12/31/2023.
The whole situation smells like a Chaper 11 filing–I haven’t tried to pro forma revenues etc., but the whole delay seems like trying to button up a filing. Honestly there is little equity left in the company and the never ending chasing of ones tail around while essentially liquidating bunches of the company doesn’t seem to make much sense. Logically they would be better off negotiating a massive reduction in unsecured debt– i.e. baby bonds and making a prepackaged Chapter 11 filing.
Anyone have opinions on the RILY situation? Without some financials that can be relied upon how can investors invest or at least make a decision whether to buy/sell or hold?
NOTE–the company did file some estimates of financials on 11/13/2024.
I owned a half position in RILYZ in 2021 at just under par and finally dumped it in early 2023 in the 19s. Took the small loss and never looked back.
I’m thinking their best course of action is to create a bunch of cryptocurrencies.
Yes, that’s a joke.
Is Nomura even the lender?
this is the quote from the EDGAR filing.
“entered into a credit agreement (as amended prior to the Fifth Amendment (as defined below), the “Credit Agreement”), dated August 21, 2023, by and among the Company, the Borrower, the lenders party thereto, Nomura Corporate Funding Americas, LLC, as administrative agent (the “Administrative Agent”) and Computershare Trust Company, N.A., as collateral agent, providing for a $500 million secured term loan credit facility and a $100 million secured revolving loan credit facility.”
“as administrative agent”
Doesnt that mean this is a syndicated loan where there are tons of banks with their own small piece of it?
justin
As a former lead banker, yes, it is a syndicated loan.
The lead, adminstrative agent, generally has the largest piece (can also have other banks at that level)
Yes, the loan agreement will require a majority vote on any amendment/extension
Most times, the admin agent will say “if we do not make this amendment, the loan will go into default which will cause cross defaults in all of the borrower’s other agreements”
Which causes the amendment/extension to be approved
I was selling OTM calls against RILY for most of 2024, but no longer have a position. I came to the conclusion that they can survive without going Ch 11. The Oaktree transaction will keep them alive. If a ch 11 filing were in the works RILYM would be trading at lower values (IMO).
Still – I would not touch this thing with a 10 foot pole it is toxic.
B. Riley sure gets a lot of attention on this board. Not sure why.
Because it’s in our sector and it went bad. We want to know why so we can sell or hold, but mostly to avoid future mistakes of the same ilk. I don’t own any but quite interested in the saga.
I am in the same boat as martin. I enjoy learning from others. I have made mistakes in the past but thankfully not this situation. It is helpful to understand so I can see possible warning signs earlier and actually have confidence to take action.
Because it’s a great case study on what happens with preferreds when things go south for a company – I don’t own it but am following it for what happens.
After getting burned on First Republic I lost my appetite for all but the blue chips.
FRC WAS a blue chip!
I’m actually a conservative investor first priority is avoid big losses so the small gains can add up. This vegas crapshoot is all yours.
Nasdaq extended the deadline to file to February 17, 2025.
Nomura reinstated a $500 million line of credit for Riley in December. because of their asset sales.
I believe the chance of a bankruptcy in the near future (say the next six months) is very close to zero.
In real estate they say three things are most important-location, location, location.
In fixed must have safety, safety, safety. One preferred or bond that goes bust can spoil the whole portfolio. I always try to keep that in mind and keep to certain requirements-for me they are:
the common can’t look like it is nosediving, and preferably long history of paying a dividend.
no recent ballooning of payout ratio.
decent preferably growing revenue and eps last 5 years.
the preferred or bond price not in a nose dive.
sometimes fun to google the stock and add risk of bankruptcy for news items.
anyhow not holder of b riley.
few other items. wonder if others have a safety list.
tacitus
Wanna have fun?
Analyze BCE with your list.
How do you come out?
Spoiler – I have “some” in my “what the heck” account
BCE does not seem to have any preferreds trading on a major exchange? Also like to see the preferred (or bond) with decent market price history, not in decline. The common stock of BCE was once 140 now under 24 and has dropped even past year about 50%. Good luck though.
With fixed, in individual bonds and preferreds, tend to be cautious. A little risk here and there with few cefs, bdcs, former for income, latter for both income and growth.
For total performance generally like equity indexing, total market and S&P. Not a trader nor market timer, nor even predictor of future rates. Don’t believe in technicals dictating major moves. But all just my opinion or preference.
They can punt until Mid – End January. All the risk takers still probably have a little time left to put their RILY house in order. End of January I believe they are on the hook to pay interest on some of their unsecured debt.
Can’t find any news in the last week but RILY is up over 6% today.
Its so junky that if I wanted to take on that risk, I’d rather just own the common. If things turn around, the common could spike several times over; even the near-maturity baby bonds just don’t offer a good enough risk-reward profile.
This if off-subject, but anyone know what’s going on with ABLLL (Abacus Life)–why the recent price and volume surge?
Robert,
There’s quite a bit of discussion over in Reader Initiated Alerts about ABLLL. Easier to send you there than to try and rehash here.
Nov. 26, 2024 “B,. Riley Announces Notification of Additional Delinquency with Nasdaq for Late Filing of Form 10-Q for Period Ended September 30, 2024
Expects to Return to Normal Filing Cadence in 2025”
I don’t think a company that is planning to file bankruptcy would say they expect to return to a normal filing cadence in 2025.
landlord
Don’t disagree.
But I am ancient enough to remember the days of fixed exchange rates.
Two days before Soros broke the pound in 1979, the British head of the Bank of England made an absolute statement ” we will never allow the pound to depreciate”.
Two days later, the BofE abandoned its support efforts and the pound dropped like a rock, making Soros $1BL richer.
When asked how his earlier statement, he famously replied “what did you expect me to say?”
Could be the same with Riley
Westie, watch the YouTube video of Scott Bessent that Bear posted. He said he never used the word never.
Most companies remain silent before bankruptcy. There are a lot of legal reasons for not saying things like “we expect to return to a normal filing cadence in 2025” while secretly working on a pre-pack bankruptcy. Aside from the legal issues, it’s not going to help them with their pre-pack.
With the Bank of England, lying definitely helps them fend off a speculative attack on their currency. So-called jawboning of your currency is a common practice.
Landlord,
As a guy who used to have to write/review that kind of drivel for companies in financial trouble, I can assure you that many companies feel the need to say *something*, even when advisors say it isn’t a great idea (sometimes it makes you wonder why they hire advisors just to ignore their advice, but that is another story).
They may feel that silence sends a bad message, or that they need to keep talking because they talk regularly, or ???.
So, part of the trick is to find things to say that won’t trigger liability if things get worse (i.e say something without any “meat”).
Saying they will return to normal cadence could be pretty safe (disclosure – I haven’t read the actual statement). What is the “normal cadence” for a company in (or going into) Chapter 11?
All that said, I have never worked with RILY and I haven’t owned anything of theirs in many years, so I am just watching the clown show from the popcorn gallery….
“part of the trick is to find things to say that won’t trigger liability if things get worse”
Sure, if things got worse, that statement wouldn’t be a problem. They were just being optimistic about things stabilizing. But if they are secretly planning a bankruptcy (negotiating with lenders, etc.). while saying that, it would be a problem.
“I can assure you that many companies feel the need to say *something*, even when advisors say it isn’t a great idea”
Reminds me of another point. I don’t think I’ve ever seen a public company go bankrupt without hiring advisors. RILY has neither hired advisors nor bankruptcy specialty lawyers like Kirkland Ellis. A lender like Nomura would almost certainly require that RILY hire advisors/lawyers to negotiate a BK.
Ha. Thats what J Powell will say too one day.
Looks like the holders of RILYM are ~93% sure about getting paid in full next month. Reports are that Rily should have enough cash to redeem RILYM if their projected November asset sales closed as expected. They have quite a lot of debt due in 2026. Don’t follow Rily anymore except to watch from the sidelines. JMO DYODD.
On the other side of what’s going on here, when you see a financial firm mess up on so many regulatory requirements and other things relating to survival, you have to wonder how that impacts the willingness of RILYs underwritten companies to continue to take financial guidance from them on their way to floating any kind of new issues… Sort of a vicious downward cycle I would imagine….. I have no ax in this…. Thankfully Ive been out of all things Rily for a long time, well before the wheels started to come off..
2wr—I haven’t held any of their stuff for years–so no dog in this fight either. It just is extremely odd for them to go silent and totally blow off the deadline for responding to NASDAQ.
They received a life line from Nomura and Nasdaq, but no reason not to be cautious. Sure the Nomura deal is designed so they get their principal and more whether its a prepack bankruptcy or not.
Other won’t be so lucky. If its a prepack, it could be very likely that you might get warrants or some equity but you will still take a gigantic haircut.