BRC Group Holdings, Inc SC TO-T, filed Jan 27, 2021

BRC Group Holdings, Inc. (RILY)

SC TO-T 2021-01-27

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		Transaction Valuation*		Amount of Filing Fee**
		$35,442,293		$3,867

		Amount Previously Paid: Not applicable.		Filing Party: Not applicable.
		Form or Registration No.: Not applicable.		Date Filed: Not applicable.

		S		third–party tender offer subject to Rule 14d–1.
		£		issuer tender offer subject to Rule 13e–4.
		S		going–private transaction subject to Rule 13e–3
		£		amendment to Schedule 13D under Rule 13d–2.

		£		Rule 13e–4(i) (Cross–Border Issuer Tender Offer)
		£		Rule 14d–1(d) (Cross–Border Third–Party Tender Offer)

B. RILEY FINANCIAL, INC.
By:	/S/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Co-Chief Executive Officer
B. Riley Principal Merger Corp. III
By:	/S/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chairman

Index No.
(a)(1)(i)		Offer to Purchase dated January 27, 2021.
(a)(1)(ii)		Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9).
(a)(1)(iii)		Form of Notice of Guaranteed Delivery.
(a)(1)(iv)		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(v)		Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5)		Joint Press Release issued by BRF and NHLD, dated January 11, 2021 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by BRF with the Securities and Exchange Commission on January 11, 2021).
(b)		None.
(d)(i)		Agreement and Plan of Merger, dated as of January 10, 2021, by and among BRF, NHLD and Merger Sub (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by NHLD with the Securities and Exchange Commission on January 11, 2021).
(d)(ii)		Termination Agreement, dated as of January 10, 2021, by and between BRF and NHLD (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by NHLD with the Securities and Exchange Commission on January 11, 2021).
(d)(iii)		Indemnification Agreement, dated as of January 10, 2021, by and between BRF and Michael A. Mullen (incorporated by reference to Exhibit (d)(iv) to the Transaction Statement on Schedule 13E-3 filed by BRF, Merger Sub and NHLD with the Securities and Exchange Commission on January 27, 2021).
(g)		None.
(h)		None.

		Page
SUMMARY TERM SHEET		1
INTRODUCTION		9
I. SPECIAL FACTORS		11
1. Background of the Offer; Past Contacts, Transactions, Negotiations and Agreements with NHLD.		11
2. Purpose of the Offer; Plans for NHLD.		17
3. Certain Effects of the Offer.		18
4. The Recommendation of the Board of Directors of NHLD.		19
5. Fairness of the Offer and the Merger.		19
6. Interests of Certain Persons in the Offer.		21
7. The Merger Agreement; Other Agreements.		21
8. Rule 13E-3.		38
II. THE TENDER OFFER		39
9. Terms of the Offer.		39
10. Acceptance for Payment and Payment for Shares.		40
11. Procedures for Accepting the Offer and Tendering Shares.		42
12. Withdrawal Rights.		44
13. Certain Material U.S. Federal Income Tax Consequences of the Offer and the Merger.		45
14. Price Range of Shares; Dividends.		47
15. Certain Information Concerning NHLD.		47
16. Certain Information Concerning Purchaser and BRF.		50
17. Source and Amount of Funds.		51
18. Dividends and Distributions.		51
19. Offer Conditions.		51
20. Adjustments to Prevent Dilution.		52
21. Certain Legal Matters; Regulatory Approvals.		53
22. Fees and Expenses.		55
23. Miscellaneous.		55

Annex A: Certain Information Regarding the Directors and Executive Officers of BRF		A-1
Annex B: Certain Information Regarding the Directors and Executive Officers of Purchaser		B-1
Annex C: Section 262 of the Delaware General Corporation Law		C-1

Securities Sought:		All of the shares of common stock, par value $0.02 per share (the “Common Stock”), of National Holdings Corporation, a Delaware corporation (“NHLD”), that are issued and outstanding (the “Shares”) that are not owned by B. Riley Financial, Inc., a Delaware corporation (“BRF”), and its subsidiaries. See “Introduction” and Section 9 — “Terms of the Offer.”
Price Offered Per Share:		$3.25 per Share, to the seller in cash (the “Offer Price”), without interest, less any applicable withholding taxes. See “Introduction” and Section 9 — “Terms of the Offer.”
Scheduled Expiration Date:		12:00 midnight, New York City time, on February 25, 2021 (one minute after 11:59 P.M., New York City time, on February 24, 2021), unless the Offer (as defined below) is extended. See Section 9 — “Terms of the Offer” and Section 11 — “Procedures for Accepting the Offer and Tendering Shares.”
Purchaser:		B. Riley Principal Merger Corp. III, a Delaware corporation (“Purchaser”) and a wholly owned subsidiary of BRF. See Section 16 — “Certain Information Concerning Purchaser and BRF.”
NHLD Board Recommendation:		The board of directors of NHLD (the “NHLD Board”), acting on the recommendation of the Special Committee (as defined below), has unanimously (i) approved and declared advisable, fair to and in the best interests of NHLD and its stockholders (other than BRF, its subsidiaries and the directors and executive officers of BRF) the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Offer and the Merger; (ii) approved the execution, delivery and performance by NHLD of the Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement, including the Offer and the Merger; (iii) resolved to recommend that the stockholders of NHLD (other than BRF and its subsidiaries) accept the Offer and tender their Shares to Purchaser pursuant to the Offer; (iv) resolved to take all actions necessary so that restrictions on business combinations and stockholder vote requirements contained in Section 203 of the DGCL and any other applicable laws with respect to a “moratorium,” “control share acquisition,” “business combination,” “fair price” or other forms of anti-takeover laws or regulations that may purport to be applicable, will not apply to the transactions contemplated by the Merger Agreement, including the Offer and the Merger; and (v) agreed and authorized that the Merger be governed by Section 251(h) of the Delaware General Corporation Law (the “DGCL”) and consummated as soon as practicable following the consummation of the Offer. See Section 4 — “The Recommendation of the Board of Directors of NHLD.”

	High		Low
Fiscal Year Ended September 30, 2019:
First Quarter	$	3.49	$	2.53
Second Quarter	$	3.70	$	2.70
Third Quarter	$	3.43	$	2.62
Fourth Quarter	$	2.87	$	2.17

Fiscal Year Ended September 30, 2020:
First Quarter	$	2.86	$	2.30
Second Quarter	$	3.06	$	1.12
Third Quarter	$	2.49	$	1.30
Fourth Quarter	$	2.68	$	1.90

	Nine months ended June 30,						Year Ended September 30,
	2020			2019			2020			2019
Consolidated statements of operations (unaudited):
Revenue	$	167,441,000		$	155,583,000		$	229,875,000		$	212,941,000
Operating Expenses		173,635,000			156,950,000			238,391,000			210,841,000
Income before Other Income (Expense) and Income Taxes		(6,194,000	)		(1,367,000	)		(8,516,000	)		2,100,000
Net Income (Loss)		(4,354,000	)		(697,000	)		(6,214,000	)		1,841,000
Net Income (Loss) attributable to National Holdings Corporation common shareholders		(4,078,000	)		(1,596,000	)		(5,938,000	)		(819,000	)
Net income (loss) per share attributable to National Holdings Corporation common shareholders – Basic		(0.31	)		(0.13	)		(0.44	)		(0.06	)
Net income (loss) per share attributable to National Holdings Corporation common shareholders – Diluted		(0.31	)		(0.13	)		(0.44	)		(0.06	)
Weighted average number of shares outstanding – Basic		13,349,669			12,751,712			13,414,009			12,821,581
Weighted average number of shares outstanding – Diluted		13,349,669			12,751,712			13,414,009			12,821,581

	June 30,						September 30,
	2020			2019			2020			2019
Consolidated statements of financial condition (unaudited)
Cash	$	30,594,000		$	25,331,000		$	27,327,000		$	30,443,000
Total assets		106,174,000			70,476,000			107,237,000			81,207,000
Total liabilities		58,424,000			21,210,000			60,602,000			29,608,000
Common stock		271,000			261,000			273,000			263,000
Additional paid-in capital		92,336,000			89,662,000			93,079,000			90,354,000
Accumulated deficit		(44,857,000	)		(41,556,000	)		(46,717,000	)		(40,779,000	)
Non-controlling interest		—			899,000			—			1,761,000
Total stockholders’ equity		47,750,000			49,266,000			46,635,000			51,599,000

		September 30, 2020
Total stockholders’ equity		46,635,000
Shares outstanding		13,639,622
Book value per share as of September 30, 2020		3.42

SEC filing fee	$	3,867
Depositary costs	$	42,000
Information agent fees	$	15,000
Legal fees and expenses	$	1,000,000
Printing and related fees	$	10,700
Total	$	1,071,506

Name		Present Principal Occupation or Employment, Material Positions Held During the Past Five Years
Robert L. Antin		Director of BRF (June 2017 — present); Co-founder of VCA Inc., a national animal healthcare company that provides veterinary services, diagnostic testing and various medical technology products and related services to the veterinary market, located at 12401 West Olympic Boulevard, Los Angeles, California 90064 (1997 — September 2017); Chief Executive Officer and President of VCA Inc. (1986 — September 2017); Chairman of the Board of VCA, Inc. (1986 — September 2017); and Director of Rexford Industrial Realty, Inc., a REIT focused on owning, operating and acquiring industrial properties in Southern California infill markets, located at 11620 Wilshire Boulevard, Suite 1000, Los Angeles, California 90025 (July 2013 — present).
Robert D’Agostino		Director of BRF (October 2015 — present); and President of Q-mation, Inc., a leading supplier of software solutions targeted at increasing operational efficiencies and asset performance in manufacturing companies (1999 — present).
Randall E. Paulson		Director of BRF (June 18, 2020 — present); Special Advisor to Odyssey Investment Partners, LLC (2019 — present); and Managing Principal of Odyssey Investment Partners, LLC, a private equity firm located at 21659 Oxnard Street, Suite 1650, Woodland Hills, California 91367 (2005 — 2019).
Michael J. Sheldon		Director of BRF (July 2017 — present); and CEO of Deutsch North America, one of the most awarded creative agencies in the United States, located at 330 W 34th Street, New York, New York 10001 (January 2015 — December 2019).
Mimi K. Walters		Director of BRF (July 2019 — present); and U.S. Representative for California’s 45th Congressional District (2015 to 2019).
Mikel Williams		Director of BRF (October 2015 — present); Chief Executive Officer and director of Targus International LLC, a privately held, leading global supplier of carrying cases and accessories for the mobile lifestyle (February 2016 — present); and Chief Executive Officer and a director of JPS Industries, Inc., a composite materials manufacturer, (2013 — 2015).

Name		Present Principal Occupation or Employment, Material Positions Held During the Past Five Years
Kenneth Young		President of BRF (July 2018 — present); Director of BRF (May 2015 — October 2016); Chief Executive Officer of B. Riley Principal Investments, LLC, a wholly owned subsidiary of BRF (October 2016 — present); Chief Executive Officer of Babcock & Wilcox Enterprises, Inc., a technology-based provider of advanced steam production from fossil and renewable sources for power generation and other industrial and municipal applications, located at 1200 East Market Street, Suite 650, Akron, Ohio 44305 (November 2018 — present); Director of Orion Energy Systems, Inc., a provider of state-of-the-art LED lighting, wireless Internet of Thins enabled control solutions, project engineering, design energy project management and maintenance services, located at 2210 Woodland Drive, Manitowoc, Wisconsin 54220 (2017 — present); Director of Sonim Technologies, Inc., a U.S. provider of ultra-rugged mobile phones and accessories designed specifically for task workers physically engaged in their work environments, located at 6836 Bee Cave Road Building 1, Suite 279, Austin, Texas 78746 (2018 — present); Director of Standard Diversified Inc., a diversified holding company located at 767 5th Avenue, 12th Floor, New York, New York (2015 — 2017); Director of bebe stores, inc., a designer, developer and producer of contemporary women’s apparel, located at 400 Valley Drive, Brisbane, California 94005 (January 2018 — April 2019); Director of Globalstar, Inc., a provider of Mobile Satellite Services, including voice and data communications services, located at 1351 Holiday Square Blvd., Covington, Louisiana 70433 (November 2015 — December 2018); and Director of Franchise Group, Inc. (fka Liberty Tax, Inc.), a provider of tax preparation services in the U.S. and Canada, located at 1716 Corporate Landing Parkway, Virginia Beach, Virginia 23454 (2018 –2020).
Phillip J. Ahn		Chief Financial Officer and Chief Operating Officer of BRF (April 2013 — present).
Alan N. Forman		Executive Vice President, General Counsel and Secretary of BRF (May 2015 — present).
Howard E. Weitzman		Senior Vice President and Chief Accounting Officer of BRF (December 2009 — present).
Andrew Moore		Chief Executive Officer, B. Riley Securities, Inc., a wholly owned subsidiary of BRF (July 2018 — present); and President of B. Riley Securities, Inc., a wholly owned subsidiary of BRF (2016 — 2018).

DESCRIPTION OF SHARES TENDERED
Name(s) and Address(es) of Registered Holder(s) (Please Fill in, if Blank, Exactly as Name(s)Appear(s) on Share Certificate(s)) Please make any address correction below	Shares Tendered (Attach additional signed list, if necessary)
£ indicates permanent address change	Share Certificate Number(s)(1)	Total Number of Shares Represented By Share Certificate(s)(1)	Total Number of Shares Represented by Book entry (Electronic Form) Tendered	Total Number of Shares Tendered(2)



	Total Shares
(1) Need not be completed by stockholders tendering by book-entry transfer. (2) Unless a lower number of Shares to be tendered is otherwise indicated, it will be assumed that all Shares described above are being tendered. See Instruction 4. By signing and submitting this Letter of Transmittal you warrant that these Shares will not be sold, including through limit order request, unless properly withdrawn from the Offer.

£		CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED HEREWITH.

£		CHECK HERE IF YOU HAVE LOST YOUR SHARE CERTIFICATE(S) AND REQUIRE ASSISTANCE IN OBTAINING REPLACEMENT CERTIFICATE(S). BY CHECKING THIS BOX, YOU UNDERSTAND THAT YOU MUST CONTACT COMPUTERSHARE TRUST COMPANY, N.A. TO OBTAIN INSTRUCTIONS FOR REPLACING LOST CERTIFICATES. SEE INSTRUCTION 11.

£		CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE FOLLOWING (NOTE THAT ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN THE SYSTEM OF DTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):

		Name of Tendering Institution: ___________________________________________________________

		DTC Account Number: _________________________________________________________________

		Transaction Code Number: ______________________________________________________________

£		CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:

		Name(s) of Tendering Stockholder(s): ______________________________________________________

		Window Ticket Number (if any): __________________________________________________________

		Date of Execution of Notice of Guaranteed Delivery: __________________________________________

		Name of Eligible Institution that Guaranteed Delivery: _________________________________________

SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 5, 6 and 7)		SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check for the purchase price of Shares accepted for payment and Share Certificates not tendered or not accepted for payment are to be issued in the name of someone other than the undersigned.		To be completed ONLY if the check for the purchase price of Shares accepted for payment and Share Certificates not tendered or not accepted are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown above.
Name	_________________________________	Name	___________________________________
(Please print)			(Please print)

Address	_________________________________	Address	___________________________________
_________________________________________		___________________________________________
(Including Zip Code)		(Including Zip Code)
_________________________________________
(Taxpayer Identification or Social Security No.) (Also Complete IRS Form W-9 Included Herein)

	IMPORTANT STOCKHOLDER: SIGN HERE (PLEASE COMPLETE AND RETURN THE IRS FORM W-9 INCLUDED IN THIS LETTER OF TRANSMITTAL OR AN APPLICABLE IRS FORM W-8)

	Signature(s) of Holder(s) of Shares

	Dated: __________________________

	Name(s) _______________________________________________________________________________
	(Please Print)
	Capacity (full title) (See Instruction 5) _______________________________________________________
	______________________________________________________________________________________
	Address _______________________________________________________________________________
	______________________________________________________________________________________
	(Include Zip Code)
	Area Code and Telephone No. _____________________________________________________________

	Must be signed by registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by Share Certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.

	GUARANTEE OF SIGNATURE(S) (IF REQUIRED — SEE INSTRUCTIONS 1 AND 5)

***If delivering by mail:		***If delivering by courier:
Computershare Trust Company, N.A. c/o Voluntary Corporate Actions P.O. Box 43011 Providence, Rhode Island 02940-3011		Computershare Trust Company, N.A. c/o Voluntary Corporate Actions 150 Royall Street, Suite V Canton, Massachusetts 02021

***If delivering by mail: By 5:00 P.M. New York City time on the Expiration Date		***If delivering by courier: By 5:00 P.M. New York City time on the Expiration Date
Computershare Trust Company, N.A c/o Voluntary Corporate Actions P.O. Box 43011 Providence, Rhode Island 02940-3011		Computershare Trust Company, N.A. c/o Voluntary Corporate Actions 150 Royall Street, Suite V Canton, Massachusetts 02021

	Number of Shares and Certificate No(s) (if available)
	__________________________________________________________________________________________
	__________________________________________________________________________________________
	£ Check here if Shares will be tendered by book-entry transfer. Name of Tendering Institution: ______________________________________________________________ DTC Account Number: ____________________________________________________________________ Dated: __________________________________________________________________________________

	Name(s) of Record Holder(s): __________________________________________________________________________________________ __________________________________________________________________________________________ (Please type or print) Address(es): _______________________________________________________________________________ (Zip Code) Area Code and Tel. No. _____________________________________________________________________ (Daytime telephone number) Signature(s): _______________________________________________________________________________ ___________________________________________________________________________________________ Notice of Guaranteed Delivery

	Name of Firm: ____________________________________________________________________________
	Address: _________________________________________________________________________________
	_________________________________________________________________________________
	(Zip Code)
	Area Code and Telephone No. _______________________________________________________________
	________________________________________________________________________________________
	(Authorized Signature)
	Name:	_________________________________________________________________________________
	(Please type or print)
	Title:	__________________________________________________________________________________
	Date:	__________________________________________________________________________________

Dated:
(Signature(s))

(Please Print Name(s))

Address
(Include Zip Code)
Area Code and Telephone No.
Taxpayer Identification or Social Security No.