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Bed Bath & Beyond: Bed Bath & Beyond announced a growing crisis on Thursday after suffering yet another significant setback.
The retailer declared that it lacked the funds necessary to settle its debts.
As a result, the business missed payments on its JPMorgan credit line and issued a foreboding bankruptcy notice.
Shares of Bed Bath & Beyond fell later on Thursday after-hours, briefly stopping trade.
The stock’s market cap decreased by 22% to settle at around $295 million.
The news
Bed Bath & Beyond disclosed that the company lacked the funds necessary to repay the loans covered by the Credit Facilities in a securities filing.
Without adequate resources, the business may have to think about other options.
Restructuring its debts in accordance with the US Bankruptcy Code is one of its choices.
Bed Bath & Beyond is now striving to reduce expenses by undertaking a number of things, such as:
- Closing stores
- Lowering capital expenditures
- Negotiating lease deals with landlords
The business did, however, offer a caution, stating that the steps might not be effective.
Challenging times
The latest Bed Bath & Beyond filing is another evidence that the retail company’s time is running out as sales are falling short and debts are mounting.
Additionally, it coincides with a period of economic transition during which inflation has been straining consumers’ purse strings.
In addition, consumers are spending more on dining out or vacations than on household items.
Other difficulties include Bed Bath & Beyond reducing credit limits and tightening credit terms because it needed early payments in the second quarter of its fiscal year.
They impeded the business from properly stockpiling products in anticipation of the holiday season, according to the filing.
Bed Bath & Beyond also disclosed that prepayments were necessary from suppliers.
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Debt
The asset-backed loan with JPMorgan has an outstanding balance of $550 million with the company.
In addition, Bed Bath & Beyond owes Sixth Street $375 million as a result of the credit facility’s expansion in August 2022.
Unsecured notes amounting to about $1.2 billion are included in the company’s debt load.
The notes’ maturity dates, which are split over 2024, 2034, and 2044, have been trading at depreciated values.
Bed Bath & Beyond previously said that it was unable to restructure some of its debt after informing investors that it intended to use more credit to settle its debts less than a month later.
The company has spent a lot of money lately.
Bed Bath & Beyond spent $890 million in cash on Thursday over the course of the nine months that concluded on November 26.
The business disclosed that it still had $225.7 million in cash as of that date.
Early warning
Bed Bath & Beyond issued a warning earlier this month that the business was thinking about declaring bankruptcy due to a lack of funding.
The business had had worse-than-expected sales, raising the possibility that it wouldn’t have enough money to pay its bills.
At the time, CEO Sue Gove insisted that the business’s priorities were revitalizing Bed Bath & Beyond and guaranteeing that its brands remained popular with consumers.
Following weeks of Bed Bath & Beyond’s “going concern” warning about not being able to pay bills after the worse-than-expected quarter.
Other options
Bed Bath & Beyond has been looking into solutions recently.
The business is debating securing funding to keep it afloat in the event that it has to file for bankruptcy.
In an effort to find a buyer and help keep its doors open for big chains, the company is presently going through a sales process.
Bed Bath & Beyond is also looking for lenders that can offer funding to keep the business operating in the scenario that it needs to seek bankruptcy protection.
“Multiple paths are being explored, and we are determining our next steps thoroughly, and in a timely manner,” a spokeswoman said last week.
Private equity investor Sycamore Partners has expressed desire to buy the company.
Buybuy Baby, which has outperformed the bigger company, is of interest to the firm.
Buybuy Baby is expected to continue to exist going ahead, according to sources.
