Bed Bath & Beyond Seeks Investment to Avert Bankruptcy
Home goods retailer Bed Bath & Beyond has announced its intention to raise approximately $1 billion through a preferred stock offering in a last-ditch effort to avoid bankruptcy. The retailer is also planning to withdraw an additional $100 million from a loan from investment firm Sixth Street, which will receive priority repayment in the event of a potential bankruptcy. The company has named bankruptcy expert Holly Etlin as its interim Chief Financial Officer.
Bed Bath & Beyond has stated that if the proposed offer is unsuccessful, the company will “probably file for bankruptcy.” The retailer has recently defaulted on a loan and has raised concerns about its future, but it has stated that if the proposed offer is successful, it will receive a waiver for the recent bank default.
The company plans to use the proceeds from the offering to pay off outstanding revolving loans, which will then be used to make an interest payment on bonds that were lost on February 1st.
Neil Saunders, Managing Director of GlobalData, has stated that while investors may be wary of buying Bed Bath & Beyond’s volatile shares, they may still find some interest in the offering.
Saunders also noted that there is no guarantee that the offer will produce the desired results, and many investors may be deterred by the company’s weak balance sheet, large amount of debt, and its fundamentally bankrupt business.
Saunders further stated that this offering is the latest attempt by a company that is desperate to raise cash and provide some financial headroom to pay off debt and continue its operations.
The retailer has experienced a decline in demand in recent years, due to a merchandising strategy that aimed to sell more store-branded products, but backfired.
In January, the company raised questions about its ability to continue as a going concern, just months after announcing more than $500 million in new financing and job cuts.
The company has also announced its plans to close an additional 150 Bed Bath stores, in addition to the 200 Bed Bath stores and 50 harmon Face Values locations that have already been closed. At its peak, the company had 955 stores open.
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