As Expected, Bed Bath & Beyond Gears up for Dilution to Combat Its Growing Liquidity Woes as the Retail-Driven Mania Keeps the Stock Price Elevated

Bed Bath & Beyond

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GameStop’s Ryan Cohen might have jumped the gun by selling his fund’s stake in Bed Bath & Beyond (NASDAQ:BBBY) at the peak mania phase of the stock’s recent spectacular gamma squeeze, but that did not mean that the ailing household items retailer would have eschewed for long the current golden opportunity to raise more capital. After all, it makes perfect economic sense for Bed Bath & Beyond to tap the current flood of retail-driven liquidity in order to try to extricate itself out of its liquidity woes. Well, that is exactly what has happened just moments ago.

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Bed Bath & Beyond has now filed a Form S-3ASR with the SEC, disclosing its intention to sell an as yet unnamed number of securities. This is an automatic shelf registration (ASR) that is available only to a “well-known, seasoned issuer” of securities.

Source: https://www.nasdaq.com/market-activity/stocks/bbby

While we do not yet know the size of the oncoming dilution, Bed Bath & Beyond has made its intention in this regard well-known now. It is, therefore, hardly a surprise that the market has taken a dim view of this development, with BBBY shares currently down over 15 percent in pre-market trading.

Today’s development comes as Bed Bath & Beyond is trying to secure a $400 million loan deal with the asset manager, Sixth Street Partners, in order to pay down some of its existing debt and improve liquidity. Moreover, the news that BBBY has tapped Kirkland & Ellis for a possible restructuring has also hurt the stock’s near-term prospects.

The cash crunch at Bed Bath & Beyond has become aggravated in recent weeks amid reports that some of the company’s suppliers were forced to halt shipments due to growing arrears and non-payment issues.

Source: https://chartexchange.com/trends/reddit/mentions/cx-all/?timeframe=6hr&shr_d=bYpLvk

Will today’s development dent the animal spirits in Bed Bath & Beyond shares? We’ll know soon enough. However, currently, the stock continues to lead discussions across all subreddits tracked by ChartExchange.

Update: Bed Bath & Beyond Provides Additional Clarity on its Turnaround Plans

Bed Bath & Beyond has now released a press statement, highlighting a number of measures to strengthen its financial position and unlock growth.

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The company intends to issue 12 million shares via an at-the-market offering. Based on the current pre-market stock price of $9.42, Bed Bath & Beyond stands to raise around $113 million from this offering.

Bed Bath & Beyond has also managed to expand its asset-backed revolving credit facility to $1.13 billion. Moreover, the household items retailer has now secured a $375 million "first-in-last-out" financing facility.

As far as cost-cutting measures are concerned, the company is optimizing its selling, general, and administrative (SG&A) expenses and reducing workforce. These measures are expected to yield savings of $250 million in FY 2022 alone. The company has also reduced its capital expenditure plans by $150 million.

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