Bed Bath & Beyond provides funding to avoid bankruptcy

Bed Bath & Beyond store in Brooklyn, New York, USA on Monday, February 6, 2023

Stephanie Keith | Bloomberg | Getty Images

Bed Bath and more will live to see another day – at least for now.

The beleaguered home improvement retailer expects to raise more than $1 billion in equity from Hail Mary stock, which it hopes will stave off bankruptcy and liquidation. the company announced on Tuesday.

The company said Bed Bath will receive $225 million in upfront plus an additional $800 million in revenue over time.

The company also received another $100 million loan from Sixth Street Partners, one of its creditors.

The company said B. Riley Securities will be the sole bookrunner for the placement.

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 securities report.

Whatever is left will be used to help the Bed Bath. turn attempt, the company said in a statement. However, he warned that if the deal did not go through, the company would “probably” file for bankruptcy and its assets would be liquidated. The company said in a statement on Monday that it will close another 150 Bed Bath stores. It has already closed 200 of its namesake stores and 50 Harmon Face Values ​​stores. Earlier last year, 955 stores were opened.

The retailer was desperate to stave off bankruptcy and was looking for investors willing to invest in or buy the company, according to CNBC. The effort has apparently failed so far, forcing Bed Bath to seek funding from the public markets.

Investors are likely to be wary of buying Bed Bath’s volatile stock, but they may find some interest from the “less rational meme crowd” who may want to “take the bait,” said Neil Saunders, managing director of GlobalData.

“In our view, this is the latest roll of the dice for a company that is desperately trying to raise money to provide some financial headroom to pay off debt and continue operations,” said Saunders, a seasoned retail analyst and consultant.

“There is no guarantee that the proposal will bring the desired results,” he said. “Many investors are likely to be put off by an incredibly weak balance sheet, a mountain of debt and a business that remains fundamentally bankrupt.”

Shares of Bed Bath, which became a meme stock favorite when activist investor Ryan Cohen invested in the company last year, surged more than 100% on Monday. (Cohen sold his stake a few months later.) However, shares fell about 44% on Tuesday. Its market value hovers around $380 million.

– CNBC Lillian Rizzo contributed to this report.

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