Bed Bath & Beyond moves to raise $1 billion to avoid bankruptcy

Bed Bath & Beyond said connected Monday it was readying to rise immoderate $1 cardinal done an offering of preferred banal and warrants successful a last-ditch effort to stave disconnected bankruptcy.

The location goods retailer said successful securities filings that if it can't implicit the analyzable transaction, it would "likely record for bankruptcy protection". The concatenation has said successful caller weeks that it had defaulted connected a indebtedness and whitethorn not beryllium capable to stay successful business, raising concerns astir its future.

Bed Bath & Beyond held talks successful caller days with an concern steadfast to underwrite a important information of the projected offering, 2 radical acquainted with the substance said.

Shares of the retailer, which closed up 92.1% astatine $5.86 successful a roller-coaster league connected Monday, were down 31.2% successful premarket trading connected Tuesday pursuing the quality of the projected offering.

Bed Bath & Beyond has been portion of the meme banal phenomenon, with shares skyrocketing arsenic overmuch arsenic 400% past twelvemonth erstwhile activistic capitalist and GameStop president Ryan Cohen took a involvement and sought changes.

Bed Bath said it was readying to rise conscionable implicit $1 cardinal done income of preferred banal and warrants and from securities erstwhile the warrants are exercised.

"Many investors are apt to beryllium deterred by the incredibly anemic equilibrium sheet, the upland of debt, and a concern that remains fundamentally broken. They volition spot this arsenic throwing bully wealth aft bad," said Neil Saunders, managing manager of GlobalData.

Bed Bath volition person a waiver connected its caller slope default should the projected offering succeed, the institution said.

The embattled retailer said it would usage the proceeds of the offering to repay outstanding revolving loans which it would past usage to marque an involvement outgo connected bonds it missed connected Feb. 1. It besides plans to gully an further $100 cardinal from a first-in-last-out indebtedness from concern steadfast Sixth Street, that takes precedence for repayment successful a imaginable bankruptcy.

Los Angeles-based concern slope B. Riley Securities is the sole publication runner connected the deal, earning up to a maximum interest of $10 million.

Bed Bath & Beyond besides appointed Holly Etlin, a bankruptcy expert, arsenic interim main fiscal officer.

The Union, New Jersey-based location goods retailer, which changeable to popularity successful the 1990s arsenic a go-to buying destination for couples making wedding registries and readying for caller babies, has seen request driblet disconnected successful caller years arsenic its merchandising strategy to merchantability much store-branded products flopped.

In January, the institution raised doubts astir its quality to proceed arsenic a going interest conscionable months aft it announced much than $500 cardinal successful caller financing, arsenic good arsenic occupation cuts and 150 store closures.

On Monday, Bed Bath said it planned to adjacent an further 150 stores, connected apical of 250 antecedently announced store closures.

Bed Bath & Beyond said successful January it had defaulted connected a indebtedness from JPMorgan Chase Bank N.A. Bloomberg News reported that the company's efforts to find a purchaser had besides stalled.

After it had filed for bankruptcy protection, rental car supplier Hertz Global Holdings attempted to merchantability caller shares but pulled the offering aft the U.S. Securities and Exchange Commission (SEC) raised concerns without elaborating connected specifics.

"It's a akin concern successful which a profoundly financially distressed institution is attempting to merchantability securities," said Lynn LoPucki, a prof astatine the University of Florida. "The aforesaid considerations are operating successful some situations. The information that 1 is successful bankruptcy and the different is not, would not marque immoderate quality successful presumption of SEC regulation."

Sources person told Reuters that Bed Bath & Beyond has lined up liquidators to adjacent further stores unless a last-minute purchaser emerges.