Bed Bath & Beyond, the struggling retailer, has warned of the possibility of filing for bankruptcy again if a proposed $300 million stock offering does not pay off. The company said in a securities filing on Thursday that its lenders reduced its loan and if it does not receive proceeds from the stock offering, it will likely have to file for bankruptcy protection.
The retailer also disclosed that the loans it secured last year were downsized. According to the filing, the company’s revolving loan was decreased from $565 million to $300 million. As part of the loan amendment, Bed Bath will now have to pay monthly interest payments.
The latest developments come after the beleaguered retailer finalized a stock offering in February that was believed to be a Hail Mary for the company. The stock offering was expected to infuse over $1 billion in equity into the company.
However, Bed Bath only raised $225 million, which it used to pay off some of its debts. Despite this, the company’s stock price has continued to decline in recent months, weighing on its fundraising efforts. On Thursday, the stock was down nearly 17% to below 70 cents a share.
Additionally, the company reported preliminary results for its fiscal fourth quarter on Thursday, with net sales of about $1.2 billion and comparable store sales declining in the range of 40% to 50%. The company noted negative operating losses have continued, although it added that it hasn’t depleted its free cash flow. For the fiscal fourth quarter of 2021, the company reported $2.05 billion in revenue.
Bed Bath & Beyond has been looking for buyers and investors in recent months to stay out of bankruptcy court. The company has been struggling for years to compete with online retailers and is also facing supply chain disruptions and staffing issues due to the pandemic. Investors will be watching closely to see if the stock offering is successful and if the company can avoid bankruptcy.
