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

Bed Bath & Beyond Inc. stated on Monday it was planning to raise some $1 billion by way of an providing of most well-liked inventory and warrants in a last-ditch effort to stave off bankruptcy.

The house items retailer stated in securities filings that if it will possibly’t full the complicated transaction, it could “likely file for bankruptcy protection.” The chain has stated in current weeks that it had defaulted on a mortgage and is probably not ready to stay in enterprise, elevating considerations about its future.

Bed Bath & Beyond held talks in current days with an funding agency to underwrite a good portion of the proposed providing, two folks conversant in the matter stated.

Shares of the retailer, which closed up 92.1% at $5.86 in a roller-coaster session, had been down 33.5% in prolonged buying and selling after information of the proposed providing.

Bed Bath & Beyond has been a part of the meme inventory phenomenon, with shares skyrocketing as a lot as 400% final 12 months when activist investor and Gamestop Corp chairman Ryan Cohen took a stake and sought adjustments.

Bed Bath stated it was planning to raise simply over $1 billion by way of gross sales of most well-liked inventory and warrants and from securities when the warrants are exercised.

Bed Bath will obtain a waiver on its current financial institution default ought to the proposed providing succeed, the corporate stated.

The embattled retailer stated it could use the proceeds of the providing to repay excellent revolving loans which it could then use to make an curiosity fee on bonds it missed on February 1. It additionally plans to draw an extra $100 million from a first-in-last-out mortgage from funding agency Sixth Avenue, that takes precedence for reimbursement in a doable bankruptcy.

Los Angeles-based funding financial institution B. Riley Securities is the only e-book runner on the deal, incomes up to a most price of $10 million.

Bed Bath & Beyond additionally appointed Holly Etlin, a bankruptcy skilled, as interim chief monetary officer.

The Union, New Jersey-based house items retailer, which shot to recognition within the Nineteen Nineties as a go-to procuring vacation spot for {couples} making wedding ceremony registries and planning for brand new infants, has seen demand drop off lately as its merchandising technique to promote extra store-branded merchandise flopped.

In January, the corporate raised doubts about its capacity to proceed as a going concern simply months after it announced greater than $500 million in new financing, in addition to job cuts and 150 retailer closures.

On Monday, Bed Bath stated it deliberate to shut an extra 150 shops, on prime of 250 beforehand introduced retailer closures.

Bed Bath & Beyond stated in January it had defaulted on a mortgage from JPMorgan Chase Financial institution N.A. Bloomberg Information reported that the corporate’s efforts to discover a purchaser had additionally stalled.

After it had filed for bankruptcy safety, rental automobile supplier Hertz World Holdings HTZ.O tried to promote new shares however pulled the providing after the U.S. Securities and Alternate Fee (SEC) raised concerns with out elaborating on specifics.

“It’s a similar situation in which a deeply financially distressed company is attempting to sell securities,” stated Lynn LoPucki, a professor on the College of Florida. “The same considerations are operating in both situations. The fact that one is in bankruptcy and the other is not, would not make any difference in terms of SEC regulation.”

Sources have told Reuters that Bed Bath & Beyond has lined up liquidators to shut further shops except a last-minute purchaser emerges. – Reuters

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