Bed Bath & Beyond has secured investor backing for more than $1 billion in capital, delaying a potential bankruptcy filing. The retailer has received commitments to raise $225 million of equity capital, initially by selling convertible preferred shares, with the remainder coming over time by issuing warrants that will require holders to purchase more preferred shares in the future.
However, investors were unconvinced that the cash infusion would be enough to keep the company afloat, as well as concerns that the new securities would dilute existing shareholders’ portfolios. Shares were down 64% year-over-year on Feb. 6, before news of the equity offering broke, and fell further to 79% down the morning of Feb 7. .
Bed Bath & Beyond still expects fiscal challenges with the additional funding. The retailer reported a projected Q1 2023 comparable sales decrease of 30% to 40% in a Jan. 6 securities filing, which would compound additional losses throughout 2022, according to The Wall Street Journal.
The filing also noted that the retailer has hired Holly Etlin as its Interim CFO. Etlin has been a partner at AlixPartners, a restructuring firm that has been advising the company. Former Interim CFO Laura Crossen will continue as Chief Accounting Officer.
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Bed Bath & Beyond first warned of a potential bankruptcy filing in early January 2023, and news that it would seek a loan or a buyer broke later in the month. However, people familiar with the matter later said discussions regarding a sale had stalled. The company has closed its remaining 50 Harmon stores as well as a number of underperforming Bed Bath & Beyond and buybuy BABY locations.
