Bed Bath & Beyond Plans to Raise Over $1 Billion to Pay Debts and Avoid Bankruptcy

Bed Bath & Beyond has had a brutal year as the company was met with supply chain disruptions, decline in sales, mounting debt and stock that's plummeted nearly 80% over the past year.

In the beginning of January, the retailer said in a filing with the Securities and Exchange Commission (SEC) that there is "substantial doubt" the company would be able to continue operating.

"While the Company continues to pursue actions and steps to improve its cash position and mitigate any potential liquidity shortfall, based on recurring losses and negative cash flow from operations for the nine months ended November 26, 2022, as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company's ability to continue as a going concern," Bed Bath & Beyond stated in the filing.

Related: Bed Bath & Beyond Accused of Cutting Air Conditioning to Slash Costs

However, now the company could be saved in the 11th hour. A new $1 billion deal consisting of convertible stock and warrants, along with a $100 million additional credit line from one of its lenders, could be enough for the retailer to pay off debts and avoid bankruptcy, The Wall Street Journal reported.

While the raised capital could potentially save the company, the plan isn't exactly foolproof.

Reena Aggarwal, a professor of finance at Georgetown University, told The New York Times that a significant risk to Bed Bath & Beyond's plan is that by the time the shares are issued, the stock price could drop even further, putting the company in a position to issue more shares and further weaken its current shareholders.

However, diluted stock — as opposed to bankruptcy — may be the lesser of two evils for shareholders, as they are the last to get paid out in any filing.

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