Item
1.01.
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Entry
into a Material Definitive Agreement.
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On
February 10, 2020, B. Riley Financial, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting
Agreement”) with B. Riley FBR, Inc., as representative of the several underwriters named therein (the “Underwriters”),
pursuant to which the Company agreed to sell to the Underwriters $115,000,000 aggregate principal amount of 6.375% Senior Notes
due 2025 (the “Firm Notes”) plus up to an additional $17,250,000 aggregate principal amount of the senior notes
to cover underwriter overallotments (the “Additional Notes” and together with the Firm Notes, the “Notes”).
The Notes were offered pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-233907)
initially filed with the Securities and Exchange Commission (the “Commission”) on September 23, 2019 and declared
effective by the Commission on September 30, 2019 (the “Initial Registration Statement”) and the Company’s
registration statement on Form S-3 (Registration No. 333-236347) filed with the Commission and effective on February 10, 2020
(the “462(b) Registration Statement,” and, together with the Initial Registration Statement, the “Registration
Statement”). On February 10, 2020, the Company priced the offering and on February 12, 2020, the offering of the Notes
closed. The Underwriting Agreement contains customary representations, warranties and covenants of the Company, customary conditions
to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act
of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants
contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for
the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties.
The
foregoing description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to the full
text of the Underwriting Agreement, a copy of which is attached hereto as Exhibit 1.1 and is incorporated herein by reference.
On
February 12, 2020, the Company entered into a third supplemental indenture (the “Third Supplemental Indenture”)
with The Bank of New York Mellon Trust Company National Association, as trustee (the “Trustee”), further supplementing
the indenture dated as of May 7, 2019 (the “Base Indenture”), as supplemented by the First Supplemental Indenture
dated as of May 7, 2019 (the “First Supplemental Indenture”) and the Second Supplemental Indenture dated as
of September 23, 2019 (the “Second Supplemental Indenture,” and, together with the Base Indenture, the First
Supplemental Indenture and the Third Supplemental Indenture, the “Indenture”), among the Company and the Trustee.
The Indenture establishes the form and, provides for the issuance, of the Notes.
The
Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other
existing and future senior unsecured and unsubordinated indebtedness. The Notes are effectively subordinated in right of payment
to all of the Company’s existing and future secured indebtedness and structurally subordinated to all existing and future
indebtedness of the Company’s subsidiaries, including trade payables. The Notes bear interest at the rate of 6.375% per
annum. Interest on the Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing
on April 30, 2020. The Notes will mature on February 28, 2025.
The
Company may, at its option, at any time and from time to time, redeem the Notes (i) on or after February 28, 2021 and prior to
February 28, 2022, at a price equal to $25.75 per note, plus accrued and unpaid interest to, but excluding, the date of redemption,
(ii) on or after February 28, 2022 and prior to February 28, 2023, at a price equal to $25.50 per note, plus accrued and unpaid
interest to, but excluding, the date of redemption, (iii) on or after February 28, 2023 and prior to February 29, 2024, at a price
equal to $25.25 per note, plus accrued and unpaid interest to, but excluding, the date of redemption, and (iv) on or after February
29, 2024 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding,
the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Notes.
The
Indenture contains customary events of default and cure provisions. If an uncured default occurs and is continuing, the Trustee
or the holders of at least 25% of the principal amount of the Notes may declare the entire amount of the Notes, together with
accrued and unpaid interest, if any, to be immediately due and payable. In the case of an event of default involving the Company’s
bankruptcy, insolvency or reorganization, the principal of, and accrued and unpaid interest on, the principal amount of the Notes,
together with accrued and unpaid interest, if any, will automatically, and without any declaration or other action on the part
of the Trustee or the holders of the Notes, become due and payable.
The
foregoing description of the Third Supplemental Indenture, and the Note does not purport to be complete and is qualified in its
entirety by reference to the full text of the Third Supplemental Indenture, and the form of Note which is attached as an exhibit
to the Third Supplemental Indenture.
Attached
as Exhibit 5.1 to this Current Report and incorporated herein by reference is a copy of the opinion of The NBD Group, Inc. relating
to the validity of the Notes that may be sold in the offering (the “Legal Opinion”). The Legal Opinion is also
filed with reference to, and is hereby incorporated by reference into, the Registration Statement.