After a wild day for the stock, Bed Bath & Beyond reportedly secures initial investor commitments to raise $225 million of equity capital, with about $800 million more to come
Bed Bath & Beyond Inc. led a revenge of the meme stocks Monday, with shares rallying 92%, but the stock turned around hard in after-hours trading as executives announced plans to sell convertible shares to get out of a loan default and stave off bankruptcy.
Bed Bath & Beyond BBBY, +92.13% announced a plan to sell convertible preferred stock as well as warrants to purchase common shares and convertible preferred stock. The company expected to raise at least $225 million in the sale, but hoped for more than $1 billion, noting the possibility of “an additional approximately $800 million of gross proceeds through the issuance of securities requiring the holder thereof to exercise warrants to purchase shares of Series A Preferred Stock in future installments assuming certain condition [sic] are met.”
Later Monday night, after the extended trading session ended, the Wall Street Journal reported that the company had received investor commitments to raise $225 million of equity capital initially, with the rest of the more than $1 billion offering coming later, citing people familiar with the matter.
In a filing with the Securities and Exchange Commission on Monday, Bed Bath & Beyond disclosed that JPMorgan Chase & Co. JPM, +0.59% and other creditors had agreed to work with the retailer if it could raise the money. Bed Bath & Beyond disclosed in late January that it was in default on loans that were called in, leading to accelerated payment and other demands, but banks agreed to waive or rescind those demands and rework the retailer’s credit facilities in exchange for proceeds from the offering, according to Monday’s filing.
The beleaguered retailer was expected to file for Chapter 11 bankruptcy, but that hasn’t stopped its stock from enjoying a sharp rise to start the year. Bed Bath & Beyond shares are up 133% to start the year, taking into account Monday’s gains. The stock was halted twice in afternoon trading Monday and racked up intraday gains upward of 130% before ending with a 92% gain, but shares fell more than 30% in after-hours trading following the news released Monday afternoon.
Bed Bath & Beyond previously acknowledged a delisting notice due to its late quarterly filing, but said Monday that was no longer an issue since it had filed the quarterly document. Bed Bath & Beyond also disclosed a new interim chief financial officer, Holly Etlin, who works for AlixPartners, which the retailer uses as a consultant. Etlin replaces Laura Crossen, who will resume her role as chief accounting officer and senior vice president of finance.
Other “classic” meme stocks enjoyed boosts in Monday afternoon activity as well. Shares of AMC Entertainment Holdings Inc. AMC, +11.84% were briefly halted at 3:28 p.m. Eastern, before trading resumed at 3:33 p.m. Shares closed up about 12%, though they were up more than 20% earlier Monday.
Shares of fellow meme stock GameStop Inc. GME, +7.24% saw a sharp move higher as well, rallying more than 7% on the day after surging as much as 11.8% earlier in the trading session.
GameStop’s stock is up 29% on the year, while AMC’s is up 67%, in another sign of the market’s bullishness.
Investors have been keener this year to embrace embattled companies. Bed Bath & Beyond’s 133% stock surge thus far in 2023 trails the 183% rally seen in shares of Carvana Co. CVNA, -7.06%, the used-car retailed that saw its stock plunge 91% in 2022 amid concerns about the company’s debt and liquidity levels.
Shares of Nordstrom Inc. JWN, -8.34%, which now counts activist Ryan Cohen among its investors, pulled back in Monday trading but have risen 50% so far in 2023. Cohen, the co-founder of Chewy Inc. CHWY, -1.15%, took a stake in GameStop in 2020 and began agitating for change at the videogame retailer.