Bed Bath & Beyond calls for special meeting; sounds bankruptcy alarm again

Bed Bath & Beyond has proposed a reverse stock split in its latest effort to avoid filing for bankruptcy.

According to a Wednesday filing with the Securities and Exchange Commission, the embattled home goods retailer wants shareholders to approve the stock split at a special meeting, to be held on May 9, so that it will have enough shares available to raise up to $300 million in equity from the stock offering it announced last week. Bed Bath & Beyond warned of the consequences if the split proposal is not approved.

“We expect that we will likely file for bankruptcy protection and that our assets will likely be liquidated unless we are able to raise sufficient equity capital,” the company said in its newest filing.

Bed Bath & Beyond said that it needs to raise equity capital to have the “necessary cash resources” to fund operations and service obligations under its credit agreement. It presently owes approximately $101.5 million (excluding approximately $105.6 million in Letters of Credit) under its credit facilities and has approximately $11.5 million available to borrow.

The company said the proposed reverse split could also boost its per-share price, which the retailer said could improve perception of its stock and attract more investors. 

“In particular, we believe that an increased share price would enable us to attract additional institutional investors and investment funds who may not consider purchasing our Common Stock due to our low trading price,” the filing stated.

The filing came on the heels of the retailer’s announcement that it has entered into a vendor consignment program with ReStore Capital, a Hilco Global company. ReStore Capital will purchase up to $120 million — on a revolving basis at any given time — of pre-arranged merchandise from Bed Bath & Beyond’s key suppliers to boost inventory levels at the retailer’s namesake and Buybuy Baby stores.

In February, Bed Bath & Beyond gave a “strategic update” on its plan to save its ailing business which included "incremental" store closures to shrink its total U.S. store to approximately 360 Bed Bath & Beyond stores and approximately 120 Buybuy Baby stores. (The company also announced it was shuttering its Harmon chain.)