Bed Bath & Beyond provides funds to avoid bankruptcy

bed bath beyond will see another day – at least for now.

The struggling homewares retailer expects to raise more than $1 billion in equity from a Hail Mary stock offering that it hopes will stave off bankruptcy and liquidation The company announced this on Tuesday.

Bed Bath will receive $225 million up front from the offering, with an additional $800 million in proceeds over time, it said.

The company also secured another $100 million loan from Sixth Street Partners, one of its lenders. B. Riley Securities will be the sole bookrunner for the offering, Bed Bath said.

Bed Bath’s stock fell more than 48% on Tuesday. Its market value is approximately $353 million.

The cash injection will be used to pay off some of the retailer’s debt after it defaulted on a loan with JPMorgan last month and missed a $25 million interest payment on Feb. 1, the company said in securities documents with.

What’s left is used to support Bed Bath attempt at a turnaround, the company announced. However, it warned that if the deal didn’t go through, it would “probably” file for bankruptcy and liquidate its assets. The company announced this in a statement on Monday it would close another 150 bed bath stores. It had already closed 200 of its namesake stores and 50 of its Harmon Face Values ​​locations. At the beginning of last year, it had 955 stores open.

The retailer has been desperate to stave off bankruptcy and has been looking for investors willing to inject or buy the company, CNBC reported. Efforts have apparently failed so far, forcing Bed Bath to turn to public markets for funding.

Investors will likely be wary of buying Bed Bath’s volatile stock, but they might find some interest from the “less rational meme stock crowd” who might be willing to “take the bait,” Neil Saunders said. Managing Director at GlobalData.

“In our view, this is the last straw for a company desperate to raise money to give itself some financial leeway to pay off debt and keep operations going,” said Saunders, a veteran retail analyst and consultant.

“There is no guarantee that the offer will bring the desired results,” he said. “Many investors are likely to be deterred by the incredibly weak balance sheet, the mountain of debt and a business that is still fundamentally broken.”

– CNBC’s Lilian Rizzo contributed to this report.