B. Riley Financial, Inc. (NASDAQ:RILY) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
Merger Agreement
On May17, 2017, B. Riley Financial, Inc. (the Company)
entered into a Merger Agreement (the Merger Agreement) by
and among the Company, Foxhound Merger Sub, Inc., a wholly owned
subsidiary of the Company (Merger Sub), Wunderlich
Investment Company, Inc. (Wunderlich), and Stephen
Bonnema, in his capacity as the Stockholder Representative (the
Stockholder Representative), to which Merger Sub will be
merged with and into Wunderlich (the Merger), with
Wunderlich as the surviving corporation. Upon completion of the
Merger, subject to certain potential adjustments, all of the
outstanding capital stock of Wunderlich will be converted into
the right to receive: an aggregate amount in cash equal to
approximately $36million; an aggregate of approximately
1.9million shares of Company common stock; and warrants to
purchase an aggregate of approximately 821,000 shares of Company
common stock. Also upon completion of the merger, the Company
will repay outstanding indebtedness of Wunderlich of
approximately $5million plus accrued interest.
The Company and Wunderlich have made customary representations,
warranties and covenants to each other. Wunderlich has also
agreed, among other things, to covenants relating to the conduct
of its businesses during the interim period between the execution
of the Merger Agreement and the consummation of the Merger. The
parties to the Merger Agreement have also agreed to use their
commercially reasonable efforts to obtain necessary regulatory
approvals and to do or cause to be done all things reasonably
necessary, proper or advisable to consummate the Merger.
The parties obligation to consummate the Merger is subject to
certain closing conditions, including: (i)the accuracy of the
other partys representations and warranties, subject to certain
materiality qualifiers; (ii)performance in all material respects
by the other party of its obligations under the Merger Agreement;
(iii)appropriate regulatory filings and approvals; and (iv)the
absence of any law or order prohibiting the Merger or the other
transactions contemplated by the Merger Agreement. The obligation
of the Company to consummate the Merger is also subject to
certain other conditions, including Gary K. Wunderlich, Jr., the
Chief Executive Officer of Wunderlich, having not (a)given any
notice of termination of employment or taken any action that
would give rise to termination for cause or (b)died or become
permanently disabled.
The Merger Agreement contains certain termination rights for both
the Company and Wunderlich, including if the Merger has not been
consummated within 120 days of the date of the Merger Agreement
or if there is a material breach by the other party that would
result in the failure of the conditions to the Merger Closing
that is not cured within a specified period.
The parties have agreed to certain indemnification obligations
for breaches of representations or warranties or covenants in the
Merger Agreement and for tax liabilities, and the Company is also
entitled to indemnity for certain additional matters. A portion
of the shares of Company common stock and warrants having a value
of
approximately $6.7million based on the current average Company
common stock trading price will be placed into an escrow account
in lieu of delivery at the closing. The escrow account will
provide the source of indemnification for the Company. Securities
not returned to the Company under the terms of the Merger
Agreement are expected to be released to the holders of
Wunderlich capital stock in part on the one-year anniversary of the
closing and the remainder on the 18-month anniversary of the
closing.
In connection with
the execution of the Merger Agreement, the Company entered into
an employment agreement with Mr.Wunderlich, contingent upon
completion of the Merger, which provides for Mr.Wunderlich to
serve as the chief executive officer of Wunderlich following
closing.
The foregoing
description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the
agreement attached hereto as Exhibit 2.1, which is incorporated
by reference herein.
The Merger
Agreement and the above description of the Merger Agreement have
been included to provide investors and securityholders with
information regarding the terms of the Merger Agreement. The
Merger Agreement and the above description are not intended to
provide any other factual information about the Company, Merger
Sub, Wunderlich, the sellers or their respective subsidiaries or
affiliates. The representations, warranties and covenants
contained in the Merger Agreement were made only for purposes of
the Merger Agreement and as of specific dates; were solely for
the benefit of the parties to the Merger Agreement; may be
subject to limitations agreed upon by the parties, including
being qualified by confidential disclosures made by each
contracting party to the other for the purposes of allocating
contractual risk between them rather than establishing these
matters as facts; and may be subject to standards of materiality
applicable to the contracting parties that differ from those
applicable to investors. Investors are not third-party
beneficiaries under the Merger Agreement and should not rely on
the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts or
condition of the Company, Wunderlich, the sellers or any of their
respective subsidiaries, affiliates or businesses. Moreover,
information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Merger
Agreement, which subsequent information may or may not be fully
reflected in public disclosures by the Company. The Merger
Agreement should not be read alone, but should instead be read in
conjunction with the other information about the Company, Merger
Sub, Wunderlich, the sellers and their respective subsidiaries,
as well as in the reports, statements and other filings the
Company makes with the United States Securities and Exchange
Commission (the SEC).
| Item8.01 | Other Events |
On May18, 2017,
the Company issued a press release announcing the execution of
the Merger Agreement, a copy of which is attached hereto as
Exhibit 99.1 and incorporated herein by reference. In addition,
the Company intends to make available to investors the slides
attached hereto as Exhibit 99.2, which are incorporated herein by
reference.
| Item9.01 | Financial Statements and Exhibits. |
(d)
Exhibits.
|
Exhibit Number |
Description |
|
|
2.1 |
Merger Agreement, dated as of May17, 2017, by and among B. Riley Financial, Inc., Foxhound Merger Sub, Inc., Wunderlich Investment Company, Inc. and the Stockholder Representative* |
|
|
99.1 |
Press Release, dated May18, 2017. | |
|
99.2 |
Investor Presentation, dated May18, 2017. |
| * |
Certain schedules and exhibits have been omitted to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
to the
requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
| B. RILEY FINANCIAL, INC. | ||||||
| Date: May18, 2017 | By |
/s/ Phillip J. Ahn |
||||
| Phillip J. Ahn | ||||||
| Chief Financial Officer and Chief Operating Officer |
EXHIBIT
INDEX
|
Exhibit Number |
Description |
|
|
2.1 |
Merger Agreement, dated as of May17, 2017, by and among B. Riley Financial, Inc., Foxhound Merger Sub, Inc., Wunderlich Investment Company, Inc. and the Stockholder Representative* |
|
|
99.1 |
Press Release, dated May18, 2017. | |
|
99.2 |
Investor Presentation, dated May18, 2017. |
| * | Certain schedules and exhibits have been omitted |
About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial, Inc. provides collaborative financial services and solutions through several subsidiaries, including: B. Riley & Co. LLC, a investment bank which provides corporate finance, research, and sales and trading to corporate, institutional and high net worth individual clients; Great American Group, LLC, a provider of advisory and valuation services, asset disposition and auction solutions, and commercial lending services; B. Riley Capital Management, LLC, an Investment Advisor, which includes B. Riley Asset Management, a provider of investment products to institutional and high net worth investors, and B. Riley Wealth Management (formerly MK Capital Advisors), a multi-family office practice and wealth management firm focused on the needs of ultra-high net worth individuals and families; and Great American Capital Partners, LLC, a provider of senior secured loans and second lien secured loan facilities to middle market public and private United States companies. B. Riley Financial, Inc. (NASDAQ:RILY) Recent Trading Information
B. Riley Financial, Inc. (NASDAQ:RILY) closed its last trading session up +0.08 at 13.78 with 62,029 shares trading hands.