Bed Bath & Beyond is seeking shareholder approval for a reverse stock split as a way to bolster the embattled home goods retailer’s share price.
In a March 17 announcement, the Union-based company said it plans to hold a special meeting March 27 to determine the split at a ratio in the range of 1-for-5 to 1-for-10, with the final makeup to be decided by the board.
“The board believes the reverse stock split will likely result in a higher per share trading price, which is intended to generate greater investor interest in the company and improve the marketability of the shares to a broader range of investors,” the company said in a U.S. Securities & Exchange Commission filing.
“In addition, our board believes that the reduction in outstanding shares of common stock will bring our outstanding share count into better alignment with companies in our industry with comparable revenue and aggregate market capitalization. Further, we expect to realize meaningful savings in stock exchange listing, shareholder meeting costs and other administrative fees as a result of the reduction in outstanding shares of common stock,” the company said.
The move comes less than two weeks after S&P Dow Jones Indices announced that Bed Bath & Beyond’s stock will be removed from the small-cap S&P 600 index as of March 20 because it no longer met the criteria.
Inclusion in the index requires that a company fall within the market cap range of $850 million to $3.7 billion and meet criteria around trading liquidity and financial stability.
As of March 20, the company’s market capitalization was $95.6 million.
Following the company’s warning in early January that it may file for bankruptcy protection, Bed Bath & Beyond’s stock has plunged 43%.
Shares were trading at 83 cents as of 1:30 p.m. EDT on March 20, down more than 95% year-over-year.
In a statement, Bed Bath & Beyond Chief Executive Officer and President Sue Gove said, “Our proposal for a reverse stock split will enable us to continue rebuilding liquidity to execute our turnaround plans and better position the company financially. We look forward to engaging with shareholders and continuing to provide meaningful updates as we progress with our strategy.”
Over the past three months, the company has taken several steps to improve its business, which include engaging with suppliers to boost inventory levels, closing low performing stores and paying off outstanding interest payments.
Bed Bath & Beyond also recently amended the terms of an equity offering to raise an additional $100 million to further support efforts to rebuild the business.
So far, the company has received a total of $360 million as part of a roughly $1 billion financing package aimed at helping it pursue a turnaround without a bankruptcy filing.r