Bed Bath & Beyond seeks to raise around $1 billion through a preferred stock offering as a last ditch effort to avoid bankruptcy.
also plans withdraw an additional $100 million from a loan from investment firm Sixth Street, which has priority for payment in a potential bankruptcy. Bed Bath & Beyond also named bankruptcy expert Holly Etlin as interim chief financial officer.
The home goods retailer said that if it is unable to complete this complex transaction, “would probably declare bankruptcy“.
The chain has said in recent weeks that it had defaulted on a loan and that you may not be able to stay in businessraising concerns about his future.
Bed Bath & Beyond will receive a waiver of its recent bank default if the proposed offer is successful, the company said.
The embattled retailer said it would use the proceeds from the deal to pay off outstanding revolving loans which he would then use to make an interest payment on the bonds he lost on February 1.
Investors are likely to be wary of buying Bed Bath’s volatile shares, but they might find some interest, Neil Saunders, managing director of GlobalData, told CNBC.
“There is no guarantee that the offer will produce the desired results,” he said. “Many investors are likely to be put off by the incredibly weak balance sheet, the mountain of debt and a business that remains fundamentally bankrupt“.
“From our point of view, this It’s the last roll of the dice for a company that’s desperate for raising cash to provide some financial headroom to pay down debts and keep operations going,” Saunders said.
The home goods retailer has seen demand fall in recent years as its merchandising strategy to sell more store-branded products failed.
In January, the company raised questions about its ability to continue as a going concern just months after announcing more than $500 million in new financingas well as job cuts.
The company said in a filing on Monday that 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. It had 955 stores open at one point early last year.
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Source: La Opinion
