Bed Bath & Beyond hopes to avoid near-term bankruptcy by selling stock (updated)

Bed Bath & Beyond announced plans for a public offering Feb. 6, a move that the embattled home goods retailer hopes will enable it to pay off debt and avoid near-term bankruptcy.

In a press release, the Union-based company said it aims to raise as much as $1.025 billion through an equity offering in addition to tapping $100 million from its credit line to repay outstanding loans.

Sources familiar with the situation told The New York Times and The Wall Street Journal that Bed Bath & Beyond has already secured investor backing for a more than $1 billion capital raise, which is expected to help the company make debt payments and continue business operations for now. Citing “people with knowledge of the matter,” Bloomberg reported Feb. 7 that New York-based hedge fund Hudson Bay Capital Management is the anchor investor of the sale.

After accruing more than $1 billion in debt and losses by the end of 2022, the company has tried to conserve cash and turn its business around.

On Monday, Bed Bath & Beyond said it planned to shutter an additional 150 stores, on top of 250 previously announced store closures. The company didn’t immediately release the latest list of closures.

Under that plan, Bed Bath & Beyond said it would shutter the 150 lower-performing stores and layoff 20% of its corporate and supply chain workforce.

Months after introducing the turnaround strategy, Bed Bath & Beyond continues to wrestle with losses and cash burn, prompting the chain to issue a going concern warning in a Jan. 5 filing with the U.S. Securities & Exchange Commission.

After struggling in recent years to turn itself around amid inventory outages, declining sales and fewer shoppers, the retailer said it is considering bankruptcy, as well as other strategic alternatives, including restructuring or refinancing debt, seeking additional debt or equity capital, pulling back on or delaying business activities, or selling assets.

In a Jan. 26 regulatory filing, Bed Bath & Beyond disclosed it received a default notice from JPMorgan and does not have sufficient money to repay a $375 million loan it secured it August 2022.

A spokesperson for Bed Bath & Beyond told NJBIZ the company will not comment further “due to regulatory requirements.”

Editor’s note: This story was updated at 2:37 p.m. ET Feb. 7 to include Bloomberg’s latest report and at 3:06 p.m. ET Feb. 7 to include a comment from Bed Bath & Beyond.