B. Riley Financial Inc., the money-losing broker-dealer and investment firm looking to cut debt, agreed to sell a majority stake in its Great American Holdings business to funds managed by Oaktree Capital Management LP. The shares surged 25% in early New York trading.
Terms of the deal call for B. Riley to receive about $203 million in cash and get 47% of the common units of a reorganized Great American, the companies said in a statement Monday.
B. Riley also gets preferred units initially valued at $183 million.
Oaktree, known for investing in distressed companies, will own a 53% common stake in Great American, which handles appraisals, valuations and liquidations and has worked with some of the biggest troubled U.S. retailers.
The deal could help B. Riley bolster its balance sheet as it wrestles with a debt load that totaled about $2 billion at midyear.
The company suspended its dividend in August to put a priority on cutting leverage, and recently renegotiated its key loan with terms that included paying down the balance and terminating a revolving credit line.
