Bed Bath & Beyond aligns funds to avoid bankruptcy

Bed bath and beyond will live to see another day – at least for now.

The beleaguered home goods retailer has completed a Hail Mary stock offering that is expected to inject more than $1 billion in equity into the business in hopes of averting bankruptcy and liquidation, the company said Tuesday.

Bed Bath took in $225 million from the offering and expects to see an additional $800 million in proceeds over time, he said.

The company also secured another $100 million loan from Sixth Street Partners, one of its lenders. B. Riley Securities was the sole bookrunner for the offering, Bed Bath said.

Shares of Bed Bath fell more than 48% on Tuesday. His market value is around $353 million.

The cash injection will be used to pay off some of the retailer’s debt after it defaulted on a loan with JPMorgan last month and missed a $25 million interest payment on Feb. 1, the company said in a statement. securities deposits.

Anything left over will be used to help Bed Bath’s attempted turnaround, the company said. However, he warned that if the deal doesn’t work out he would “probably” file for bankruptcy and see his assets liquidated.

To keep costs down, Bed Bath wants to drastically reduce its physical footprint to 480 stores in total — 360 with the Bed Bath banner and another 120 Buy Buy Baby stores, the company said in a press release.

The company said in a filing on Monday that it would close an additional 150 Bed Bath stores. It had already closed 200 of its namesake stores and 50 of its Harmon Face Values ​​locations. There were 955 stores open at one point earlier last year.

Bed Bath CEO Sue Grove touted the share offering as a “transformative transaction” that gave the company the breathing room it needed to continue its turnaround.

“This will allow us to better serve our customers and grow profitably by directing merchandise where and how they want to shop with us. We are also prioritizing the availability of leading national and emerging direct-to-consumer brands that our customers know and love,” Grove said.

Yet some analysts and experts believe that bankruptcy remains inevitable.

The retailer is desperate to avoid bankruptcy and is looking for investors willing to pump money into the business or buy it, CNBC reported. Efforts have obviously failed so far, forcing Bed Bath to turn to public markets for funding.

Investors are likely to be wary of buying Bed Bath’s volatile stocks, but they may find some interest in the “even less rational stock crowd” who may be ready to “take the bait”, it said. Neil Saunders, Managing Director of GlobalData.

“In our view, this is a final roll of the dice from a company desperate to raise cash to give itself financial breathing room to service debt and maintain operations,” said analyst Saunders. and veteran retail consultant.

“There is no guarantee that the offer will produce the desired results,” he said. “Many investors will likely be discouraged by the incredibly weak balance sheet, mountain of debt and a business that remains fundamentally broken.”

–CNBC Lillian Rizzo contributed to this report.