A Bed Bath & Beyond store in the Brooklyn borough of New York, USA, on February 6, 2023. Bed Bath & Beyond Inc. said it will close another 87 stores in addition to the 150 closures announced in August.
Stephanie Keith Bloomberg Getty Images
Bed Bath & Beyond said there was a plan to raise some $ 1 billion through the offering of preferred stock and guarantees in- the last effort to stave off bankruptcy.
The home goods retailer said in a securities filing that if it is unable to complete the complex transaction, it “will likely file for bankruptcy protection”. The chain has said in recent weeks that it has defaulted on debt and may not be able to stay in business, raising concerns about its future.
Bed Bath & Beyond is currently in talks with an investment firm to underwrite a significant portion of its proposed offering, two people familiar with the matter said.
Shares of the retailer, which closed up 92.1% at $5.86 in Friday’s roller-coaster session, fell 31.2% in premarket trading on Tuesday after news of the proposed offering.
Bed Bath & Beyond has become part of the meme stock phenomenon, with shares rising as much as 400% last year as activist investors and GameStop chairman Ryan Cohen took stock and sought change.
Bed Bath said it is planning to raise just over $1 billion through the sale of preferred shares and warrants and from securities when warrants are exercised.
“Many investors are likely to be deterred by a very unusual balance sheet, a mountain of debt, and a business that remains fundamentally broken. They will see this as a waste of good money after bad,” said Neil Saunders, managing director of GlobalData.
Bed Bath will receive a waiver on the new bank standards if the proposed offering is successful, the company said.
The embattled retailer said it will use the proceeds of the offering to repay the outstanding revolving loan which will then be used to make interest payments on the missed bond on February 1. It also plans to draw an additional $100 million from the first-in. – the last loan from the Sixth Street investment company, which takes priority for repayment in possible bankruptcy.
Los Angeles-based investment bank B. Riley Securities was the sole book runner on the deal, earning a maximum fee of $10 million.
Bed Bath & Beyond also appointed Holly Etlin, a bankruptcy expert, as interim chief financial officer.
The Union, a New Jersey-based home goods retailer that became popular in the 1990s as a shopping destination for couples making wedding registries and planning new babies, has seen a decline in demand in recent years due to its sales strategy. other store-branded products flopped.
In January, the company cast doubt on its ability to continue as a going concern just months after announcing more than $500 million in new funding, as well as job cuts and 150 store closings.
On Monday, Bed Bath said it plans to close an additional 150 stores, on top of the 250 stores it previously announced.
Bed Bath & Beyond said in January it has defaulted on a loan from JPMorgan Chase Bank NA Bloomberg News reported that the company’s efforts to find a buyer are also stalled.
After filing for bankruptcy protection, rental car provider Hertz Global Holdings tried to sell new shares but pulled the offer after the US Securities and Exchange Commission (SEC) raised concerns without elaborating.
“It’s a similar situation to a company in financial trouble trying to sell securities,” said Lynn LoPucki, a professor at the University of Florida. “The same considerations operate in both situations. The fact that one is bankrupt and the other is not, will not make a difference in terms of SEC regulations.”
Sources told Reuters that Bed Bath & Beyond has appointed liquidators to close additional stores unless a final buyer is found.