In bid to prevent bankruptcy, Bed Bath & Beyond seeks $1 billion

NEW YORK CITY, New York: In a last-ditch effort to avoid bankruptcy, home goods retailer Bed Bath & Beyond said it aims to raise some $1 billion through an offering of preferred stock and warrants.

The company will issue 23,685 shares of Series A convertible preferred stock, warrants to purchase 84,216 shares of Series A convertible preferred stock and warrants to buy more than 95 million shares of the company’s stock.

In securities filings, the company said that if it cannot complete the complex transaction, it would "likely file for bankruptcy protection."

In recent weeks, it had defaulted on a loan and might not be able to remain in business, therefore, raising concerns about its future.

Bed Bath & Beyond and an investment firm discussed the possible underwriting of a significant portion of the proposed offering.

Bed Bath & Beyond predicts gross proceeds of some $225 million from the initial offering, and plans to raise another $800 million through future installments.

However, Neil Saunders, managing director of GlobalData, said, "Many investors are likely to be deterred by the incredibly weak balance sheet, the mountain of debt, and a business that remains fundamentally broken. They will see this as throwing good money after bad," as quoted by Reuters.

The company said it will receive a waiver on its recent bank default should the proposed offering succeed, adding that it planned to close an additional 150 stores, in addition to 250 previously announced closures.

In January, Bed Bath & Beyond said it had defaulted on a loan from JPMorgan Chase Bank, and Bloomberg News reported that the company’s efforts to find a buyer had also fallen through.