Bed Bath & Beyond Lines Up Funding in a Last-Ditch Bid to Avoid Bankruptcy

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  • Bed Bath & Beyond has so far failed to find buyers, prompting it to propose a stock offering that could infuse more than $1 billion into the company.
  • The cash-strapped, debt-laden home goods retailer will receive $225 million from the offering up front and $800 million over time, the company said.
  • Analysts described the move as a last ditch effort to save the company, which could still be liquidated if the deal doesn't work out.

Bed Bath & Beyond will live to see another day – at least for now. 

The beleaguered home goods retailer has finalized a Hail Mary stock offering that's expected to infuse more than $1 billion in equity into the company in hopes it'll stave off bankruptcy and liquidation, the company announced Tuesday

Bed Bath brought in $225 million in the offering and expects to see another $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 was the sole bookrunner for the offering, Bed Bath said. 

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

The cash infusion will be used to pay some of the retailer's debts 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 filings. 

Whatever's left over will be used to aid Bed Bath's attempt at a turnaround, the company said. However, it warned that if the deal doesn't work out, it will "likely" file for bankruptcy and see its assets liquidated.

To keep costs low, Bed Bath wants to significantly reduce its brick and mortar footprint to 480 total stores – 360 with the Bed Bath banner and another 120 Buy Buy Baby stores, the company said in a news release.

The company said in a filing Monday that it would close an additional 150 Bed Bath stores. It had already shuttered 200 of its namesake stores and 50 of its Harmon Face Values locations. It had 955 stores open at one point earlier last year.

Bed Bath CEO Sue Grove touted the stock offering as a "transformative transaction" that gave the company the breathing room it needed to continue with its turnaround.

"This will enable us to better serve our customers, and grow profitably, by directing merchandise where and how they want to shop with us. We are also prioritizing availability of leading national and emerging direct-to-consumer brands our customers know and love," Grove said.

Still, some analysts and experts believe bankruptcy remains inevitable.

The retailer has been desperate to stave off bankruptcy and has been seeking investors willing to inject cash into the company or buy it, CNBC has reported. The efforts have evidently failed thus far, forcing Bed Bath to go to the public markets for funding.

Investors are likely to be wary of buying Bed Bath's volatile stock but they could find some interest from the "less rational meme stock crowd," which might be willing to "take the bait," said Neil Saunders, managing director at GlobalData. 

"In our view, this is a last roll of the dice from a company that is desperate to raise cash to provide some financial headroom to pay down debts and keep operations going," said Saunders, a veteran retail analyst and consultant. 

"There is no guarantee that the offering will yield 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 remains fundamentally broken." 

– CNBC's Lillian Rizzo contributed to this report.

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