Bed Bath & Beyond warns it doesn’t have the money to pay off debts

The sign is visible through an overturned cart outside the Bed Bath & Beyond Inc store. in Greendale, Wisconsin.

Daniel Acker | Bloomberg | Getty Images

Bed Bath and more said on Thursday that he does not have enough money to pay off his debts and has defaulted on his JP Morgan credit line, once again warning of potential bankruptcy.

Shares of Bed Bath fell on Thursday afternoon, leading to short-term trading pauses. The stock last fell about 20%, leaving the company’s market value at about $300 million.

In securities documentationthe struggling home improvement retailer said it “doesn’t have the resources to repay its lines of credit and this will force the company to consider all strategic alternatives, including restructuring its debt under the US Bankruptcy Code.”

Bed Bath is trying to cut costs through capital cost cuts, store closures and lease negotiations with its landlords, but warned that “these measures may not succeed.”

The latest filing is another sign that Bed Bath’s time is running out as sales lag and debt piles up at the cash-strapped retailer. It comes at a time when inflation is weighing on consumers’ wallets and shoppers are putting their discretionary dollars into entertainment like dining out or booking trips rather than home goods.

Amid difficult macroeconomic challenges, Bed Bath’s suppliers tightened their lending terms and cut limits, requiring early payments in the second fiscal quarter, which prevented the company from properly stockpiling its inventory ahead of the holiday season, the statement said. According to the company, some suppliers required prepayment.

The company owes $550 million on an asset-backed loan to JP Morgan and $375 million to a Sixth Street lender after extending a credit line last August.

Bed Bath’s debt load also includes nearly $1.2 billion in unsecured bonds with maturities spread over 2024, 2034 and 2044, trading at troubled levels. The company previously said it was unable to refinance some of that debt less than a month after it told investors it plans to borrow more to pay off its obligations.

The company has been burning money in recent quarters. The company said on Thursday that it used $890 million in cash in the nine months ended Nov. 26. At that point, Bed Bath stated that it had $225.7 million in cash left.

Thursday’s update comes weeks after the retailer issued a “going concern” notice that it may not be able to cover its costs after a worse-than-expected quarter.

Bed Bath has been exploring its options in recent weeks. CNBC previously reported that the retailer is in talks to secure funding that will keep it afloat if it files for bankruptcy.

The company is also in the midst of a sale in hopes of maintaining its eponymous chain and the Buybuy Baby business. In addition, the company was preparing for a possible Chapter 11 filing in the United States Bankruptcy Court in New Jersey, as CNBC previously reported.

Shares in Bed Bath & Beyond are down about 80% in the past 12 months.

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