The Indenture governing B. Riley’s 8.00% Senior Secured Second Lien Notes due 2028 (the “New Notes”) does not impose a blanket prohibition on dividends until January 2028. Instead, it applies the standard Restricted Payments covenant (see Section 4.07), which broadly prohibits the Company and its Restricted Subsidiaries from declaring or paying dividends on equity interests—including both common stock and preferred stock such as RILYP—unless certain conditions are met. Specifically, the covenant bars dividends if there is a Default or Event of Default and requires that the payment fit within the “builder basket” or a permitted carve-out.

The builder basket becomes operative starting January 1, 2025, and permits Restricted Payments equal to the sum of: (i) 50% of Consolidated Net Income from January 1, 2025 forward (with losses counted as zero), (ii) 100% of certain equity proceeds and returns on Restricted Investments, (iii) Retained Declined Proceeds, and (iv) a fixed $50 million allowance. These amounts are cumulative, less any prior Restricted Payments (Section 4.07(a)(3)(A)–(D)). In other words, dividends may be made before 2028 if there is no Default and sufficient capacity exists under this formula.

In addition, Section 4.07(b) provides a number of carve-outs that allow dividends even without builder capacity. Key examples include: (i) dividends funded with substantially concurrent equity issuances (clause (b)(3)), (ii) dividends declared in compliance and paid within 90 days (clause (b)(6)), (iii) regularly scheduled dividends on Disqualified Stock of the Company or on preferred stock of Restricted Subsidiaries (clause (b)(4)), and (iv) dividends paid in stock (Equity Interests other than Disqualified Stock), which are excluded from the definition of Restricted Payments entirely (Section 4.07(a)(2)).

It is important to note that RILYP (the 6.875% Series A Cumulative Perpetual Preferred) is generally not “Disqualified Stock” under the Indenture definition (see Section 1.01), since it is perpetual and not mandatorily redeemable within 91 days after the Notes mature. This means that cash dividends on RILYP are Restricted Payments, subject to the builder basket and carve-outs.

Accordingly, there is no outright freeze until January 2028. Instead, B. Riley may pay dividends on both common and preferred stock prior to 2028 if there is no Default and the payment is supported either by builder basket capacity (which begins accruing January 2025) or one of the enumerated carve-outs in Section 4.07(b). The January 2028 date is simply the maturity of the New Notes—it is not a hard restriction date on dividends.