Bed Bath & Beyond is expecting to receive more than $1 billion in equity from a Hail Mary stock offering it hopes will stave off bankruptcy and liquidation, the company says.
Bed Bath will receive $225 million in the offering up front plus an additional $800 million in proceeds over time, the company said.B. Riley Securities will be the sole bookrunner for the offering, the company said.after it defaulted on a loan with JPMorgan last month and missed a $25 million interest payment on Feb. 1, the company said in securities filings., the company said.
Investors are likely to be wary of buying Bed Bath’s volatile stock but they could find some interest from the “less rational meme stock crowd,” which might be willing to “take the bait,” said Neil Saunders, managing director of GlobalData. “In our view, this is a last roll of the dice from a company that is desperate to raise cash to provide some financial headroom to pay down debts and keep operations going,” said Saunders, a veteran retail analyst and consultant.
“There is no guarantee that the offering will yield the desired results,” he 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.” On Monday, Bed Bath’s shares, which became a meme stock favorite when activist investor Ryan Cohen invested in the company last year, surged by more than 100%. The stock fell about 35% Tuesday, however. Its market value is hovering around $445 million.
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