(Bloomberg) -- B. Riley Financial Inc. posted a wider quarterly loss, halved its dividend and delayed filing its annual report, citing a review of transactions with a key client that have drawn attacks by short sellers. Shares of the boutique investment bank fell 15% in late trading.

The delay was due to the review by its board and outside counsel of its dealings with Brian Kahn, the former head of Franchise Group Inc., B. Riley said in a statement. The investment bank also retained Moelis & Co. to help assess strategic options such as a sale for its appraisal and asset-disposition businesses, formerly known as Great American Group.

B. Riley’s fourth-quarter loss totaled $70 million, or $2.32 a share, compared with $59 million a year earlier, the Los Angeles-based company said. Revenue dropped to $346 million from $382 million. The dividend was cut to 50 cents a share from $1.

The payout was cut “to focus on the many opportunities we have to invest in our own business, including potentially repurchasing our debt at attractive prices,” Chief Executive Officer Bryant Riley said in the statement. 

B. Riley didn’t give a firm estimate on when it will file the overdue report, formally known as a Form 10-K, but added it doesn’t expect any significant changes to the financial results it released Thursday. Such a delay, however, can unnerve investors because it puts off certification by the company’s outside auditing firm, and Bryant Riley declined during the conference call to tell an investor whether the auditors have agreed to sign off.

Shares of B. Riley have lost more than half their value in the past 12 months amid concern about its deals with Kahn, a former business partner who has been blamed by some investors for the 2020 collapse of a hedge fund unrelated to B. Riley called Prophecy Asset Management. The fund’s demise has been the subject of a federal investigation, and a key executive there pleaded guilty to fraud charges in November.

Franchise Group

While Kahn was managing money for Prophecy, he acquired a controlling stake in Franchise Group, a collection of retail chains that he later took private in August with help from B. Riley. Short sellers contend that the Prophecy fraud case casts doubt on the validity of his ownership in Franchise Group and could impair B. Riley’s stakes in that firm.

Kahn maintains he didn’t do anything wrong and has said he was among those who were defrauded. He hasn’t been charged with anything.

Read More: SEC Probes B. Riley Deals With Client Tied to Failed Fund  

B. Riley previously dismissed the idea that fallout from the Prophecy episode could affect its own fortunes or its assets related to Franchise Group, and has lashed out at short sellers pushing the narrative. 

In a Feb. 22 statement, B. Riley said a nine-week review commissioned by the board’s audit committee using outside counsel had concluded “the company and its executives, including Bryant Riley, had no involvement with, or knowledge of, any of the alleged misconduct concerning Prophecy.” 

Great American

Great American, the unit that might be sold, has played a prominent role in retailer turnarounds, restructurings, bankruptcies and liquidations, including clients such as Toys ‘R’ Us and Bed, Bath & Beyond. Bryant Riley declined to say how much a sale of the unit might raise, but it’s “poised to take off with a different entity,” he told investors during the conference call. “I think a larger institution with a bigger balance sheet is going to kill it with that asset.”

The proceeds, along with savings from the dividend cut, could help meet part of B. Riley’s upcoming debt maturities, some of which might be more costly to refinance if interest rates stay high. Thursday’s statement listed $2.36 billion of debt at year-end, along with $1.9 billion of cash and investments.

About $183 million had been scheduled to come due this year, according to data compiled by Bloomberg before Thursday’s quarterly report, and close to $480 million was set for 2025. Some of those debts could be bought back at discounted prices to reduce the burden.

“We have an opportunity to, I think, create real value based on the perception of our company right now by some,” Bryant Riley said.

Read More: Franchise Group’s Kahn Steps Down Amid Hedge Fund Inquiry  

Some short sellers remained unconvinced after the presentation. 

“B. Riley has yet to tell the truth about its relationship with Brian Kahn,” Marc Cohodes, who has been betting against the company’s stock, said via email. He expressed doubt about B. Riley’s ability to file its annual report, adding, “the debt of the company is far greater than their underperforming assets.”

(Updates with comments from conference call and short seller, starting in the fifth paragraph.)

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