Published - February 8, 2023 @ 11:05 AM (EET)
The beleaguered home goods retailer, Bed Bath & Beyond (NASDAQ:BBBY), has received excessive attention from investors on an otherwise relatively quiet day in the market.
On Tuesday, the company announced a share sale of more than $1 billion, hoping it'll stave off bankruptcy and liquidation, following which Hudson Bay Capital Management became the anchor investor.
According to people with knowledge of the matter, the New York-based multi-strategy hedge fund comprised the most significant order among several institutional investors that helped Bed Bath & Beyond enter into the transaction.
Bed Bath & Beyond, which first reported the prospect of bankruptcy last month, said it raised about $225 million in an equity offering earlier on Tuesday. It expects to see another $800 million in proceeds over the next couple of months, the company said.
WHY IT MATTERS
The securities deal, arranged by B. Riley Securities Inc., will likely give the company some breathing room to avert an imminent financial crunch. However, some analysts and experts still believe bankruptcy remains inevitable, especially given the company's own comments about its financial situation.
In a securities filing on Monday, Bed Bath & Beyond warned that it might have to file for bankruptcy protection even if the offering is completed.
Managing director Robert Gilliland at Concenture Wealth Management said the offering
"may be a Band-Aid, but I'm not certain of all the makeup of their balance sheet." "The problem is that they're probably not going to be a big turnaround story," he said.
NOW WHAT
After the market close on Tuesday, the retailer, in a statement, said it is continuing to close stores aiming to have around 360 Bed Bath & Beyond stores and 120 Buybuy Baby stores in the US.
While the time frame for the closures is still unknown, the company also said it would strengthen its portion of digital sales.
"We are also prioritizing availability of leading national and emerging direct-to-consumer brands our customers know and love," Chief Executive Officer Sue Gove said in the statement.
Bloomberg News first reported the Hudson Bay Capital development. All parties declined to comment on the matter. Meanwhile, the retailer's stock fell more than 48% on Tuesday.
