NEW YORK, Feb 7 — Bed Bath & Beyond Inc said yesterday it was planning to raise some US$1 billion (RM4.6 billion) through an offering of preferred stock and warrants, in a last-ditch effort to stave off bankruptcy.
The move comes just weeks after the retailer said it had defaulted on a loan, raising concerns about its future.
Shares of the retailer, which closed up 92.1 per cent at US$5.86 in a roller-coaster session, were down 33.5 per cent in extended trading.
Bed Bath said it was planning to raise about US$225 million through an offering of Series A convertible preferred stock and an additional US$800 million by issuing securities to buy shares of preferred stock in future installments.
The retailer said in a securities filing it would “likely file for bankruptcy protection” if the transactions are not consummated.
Bed Bath will receive a waiver on its recent bank default should the proposed offering succeed, the company said.
The embattled retailer said it would use the proceeds of the offering to repay outstanding revolving loans under its asset-based lending (ABL) facility.
The company also appointed Holly Etlin, a bankruptcy expert, as interim chief financial officer.
The Union, New Jersey-based home goods retailer, which shot to popularity in the 1990s as a go-to shopping destination for couples making wedding registries and planning for new babies, has seen demand drop off in recent years as its merchandising strategy to sell more store-branded products flopped.
In January, the company raised doubts about its ability to continue as a going concern just months after it announced more than US$500 million in new financing, as well as job cuts and 150 store closures.
Yesterday, Bed Bath said it planned to close an additional 150 stores, on top of 250 previously announced store closures.
Retailers in distress often look to bankruptcy protection after the holiday season to take advantage of the cash cushion provided by recent sales.
Bed Bath & Beyond said in January it had defaulted on a loan from JPMorgan Chase Bank N.A. Bloomberg News reported that the company’s efforts to find a buyer had also stalled.
Prospective buyers sometimes wait until a company files for bankruptcy before agreeing to purchase assets, hoping to negotiate more favourable terms.
Sources have told Reuters that Bed Bath & Beyond has lined up liquidators to close additional stores unless a last-minute buyer emerges. — Reuters
