Financial Services Firm B Riley Financial Sells a Nice Baby Bond
By: Tim McPartland,
Financial services firm B Riley Financial (NASDAQ:RILY) has sold a new baby bond issue. The issue has a coupon of 7.5% and a maturity date in 2027 which are terms that are very enticing to us.
B Riley is a Los Angeles based financial services company that provides a full array of corporate finance, research, sales and trading services to corporate, institutional and high net worth worth clients. B Riley came public in 1997 and by and large they have been reasonably profitable, although they had a bit of a slip in 2014 when they had a loss. The company is not a large firm garnering revenue in 2016 of just $190 million.
B Riley recently announced the acquisition of regional financial services company Wunderlich Securities for total consideration of $67 million. This follows on the announcement in March of the pending acquisition of FBR & Co. in a transaction valued at $160 million. These deals are expected to close in early June. With the pending acquisitions B Riley will more than double in size and will be the self proclaimed leader in small cap underwriting and research coverage.
Since this issue fits our needs having a shorter duration we plan to purchase this issue if we can buy it at around $25/share. Note that B Riley has another 7.5% baby bond outstanding which has a maturity date of 2021 and is trading at around $25.75/share. One reason we are interested in the new issue is because we should be able to buy it at around $25.
Being a debt issue this issue likely won’t trade on the OTC Grey Market, but should begin trading in the next week under the ticker symbol RILYZ on NASDAQ.
Details of this new issue can be found here.
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