Bed Bath & Beyond has reportedly lined up investors for last-minute cash to help the struggling home goods retailer avoid bankruptcy — but experts doubt whether the plan will work. will work.
According to Bloomberg, Hudson’s Bay Capital Management has agreed to a preferred stock sale that Bed Bath & Beyond disclosed late Monday that will raise more than $1 billion.
After all, the retailer’s shares — which closed up 92 percent on Monday at $5.86, led by a rally in meme stock — were down more than 45 percent on Tuesday, trading at $3. Were.
“There’s no chance that the plan they announced yesterday will stop the bankruptcy filing, because the debt hole they’re in is so big,” said distressed debt expert David Vander. , partners with Tarter, Krinsky and Drogin.
“If you bought $BBBY at $5.75 you actually deserve to lose money,” tweeted CNBC anchor Jim Cramer.
“What the “geniuses” chasing bankrupt companies don’t understand is that it’s only a matter of time before these companies dump stock and use the pumps to raise much-needed cash,” tweeted the Wall Street maverick. Is.”
“Shame on Bed Bath & Beyond for taking advantage of the meme crowd who can’t control themselves from throwing good money after a bad stock,” Vander added.
The company on Monday announced plans to avoid bankruptcy by obtaining a $100 million credit line from one of its lenders — Sixth Street Partners — and approval to raise more than $1 billion in the sale of preferred stock, according to an SEC filing. gave The company said the funds will be used to pay down its $1.1 billion in debt.
At the same time, the home goods company admitted in a filing that it “will likely file for bankruptcy protection” if all of these transactions “are not fully completed.”
Bed Bath & Beyond — which defaulted on a JPMorgan Chase loan in January, sending it into bankruptcy — didn’t offer much hope that its plan would work.
“There are certain conditions to our receipt of proceeds upon each closing, including that our common stock remain listed on a national securities exchange, that we have sufficient authorized common stock to issue shares,” the filing said. stock, he said, adding that “existing holders of our common stock will be significantly diluted by the issuance of securities in this offering.”
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