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Item
1.01.
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Entry
into a Material Definitive Agreement.
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On
May 14, 2018, 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 $87,000,000
aggregate principal amount of 7.375% Senior Notes due 2023 (the “
Firm Notes
”) plus an additional
$13,050,000 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. 333-223789) initially filed with the Securities
and Exchange Commission (the “
Commission
”) on March 20, 2018 and declared effective by the Commission on
April 6, 2018. On May 14, 2018, the Company priced the offering and on May 17, 2018, 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
May 17, 2018, the Company entered into a supplemental indenture (the “
Fourth Supplemental Indenture
”) with
U.S. Bank National Association, as trustee (the “
Trustee
”), further supplementing the indenture dated as of
November 2, 2016 (the “
Base Indenture
”), as previously supplemented by a First Supplemental Indenture dated
as of November 2, 2016 (the “
First Supplemental Indenture
”), a Second Supplemental Indenture dated as of May
31, 2017 (the “
Second Supplemental Indenture
”) and a Third Supplemental Indenture dated as of December 13,
2017 (the “
Third Supplemental Indenture
” and together with the Base Indenture, the First Supplemental Indenture,
the Second Supplemental Indenture and the Fourth 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 7.375% 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 July 31, 2018. The Notes will mature on May 31, 2023.
The
Company may, at its option, at any time and from time to time, redeem the Notes (i) on or after May 31, 2020 and prior to May
31, 2021, 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 May 31, 2021 and prior to May 31, 2022, at a price equal to $25.375 per note, plus accrued and unpaid interest to,
but excluding, the date of redemption, and (iii) on or after May 31, 2022 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 Base Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture,
Fourth Supplemental Indenture and the Notes does not purport to be complete and is qualified in its entirety by reference to the
full text of the Base Indenture, First Supplemental Indenture, Second Supplemental Indenture, Third Supplemental Indenture, Fourth
Supplemental Indenture and the form of Note which is attached as an exhibit to the Fourth Supplemental Indenture. A copy of the
Fourth Supplemental Indenture and the form of Note are attached to this Current Report on Form 8-K as Exhibit 4.1 and 4.2, respectively,
and are incorporated herein by reference and into the Registration Statement. Copies of the Base Indenture and First Supplemental
Indenture are attached to the Current Report on Form 8-K, filed with the Commission on November 2, 2016, as Exhibits 4.1 and 4.2,
respectively, and are incorporated herein by reference and into the Registration Statement. A copy of the Second Supplemental
Indenture is attached to the Current Report on Form 8-K, filed with the Commission on May 31, 2017, as Exhibit 4.1, and is incorporated
herein by reference and into the Registration Statement. A copy of the Third Supplemental Indenture is attached to the Current
Report on Form 8-K, filed with the Commission on December 13, 2017, as Exhibit 4.1, and is incorporated herein by reference and
into the Registration Statement.
Attached
as Exhibit 5.1 to this Current Report and incorporated herein by reference is a copy of the opinion of Morrison & Foerster
LLP 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.