Bed Bath & Beyond proposes reverse stock split as it struggles to avoid bankruptcy

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A customer leaves the Bed, Bath & Beyond store on August 31, 2022 in Oakland, California.

Justin Sullivan | Getty Images

bed Bath and Beyond Wants shareholders to approve a reverse stock split at upcoming special meeting as retailer keeps operating avoid filing for bankruptcyaccording to a securities filing late Wednesday.

The retailer’s board is asking shareholders to approve a reverse stock split at its May 9 meeting so that it has enough shares available for the raise. $300 million in equity From the stock offering announced last week.

bed bath fundraising efforts It has been hampered by its declining stock price, which is on a steep decline and has been trading below $1 for the past few weeks. Bed Bath shares were trading at about 30 cents on Thursday morning, giving the company a market value of about $132 million.

The company is concerned that it may not have enough equity if the plan is not met. pay off its debt And keep its doors open, the company said in the filing.

“The company may be unable to avoid bankruptcy if the reverse split proposal fails to obtain shareholder approval. We need to maintain the cash resources necessary to meet operating and service obligations under our credit agreement,” the filing said. There is a need to raise equity capital.

The beleaguered retailer said the reverse stock split would take place in a ratio, to be determined by the board, in the range of 1-for-10 to 1-for-20. If the split is approved, it will significantly reduce the number of outstanding shares of common stock available, which will allow it to issue enough stock to satisfy the terms of the offering.

The reverse split could also boost Bed Bath’s per share price, which the company hopes can improve sentiment for its stock and attract more investors.

“We believe that a higher share price may make our Common Stock more attractive to a wider range of investors, as we believe that the current market price of our Common Stock may be less attractive to certain professional investors and other members of the investing public.” may affect its acceptability for Filing says.

“In particular, we believe that the increased share price will enable us to attract additional institutional investors and investment funds that may not consider purchasing our common stock due to our low trading price.”

Still, even if the reverse split temporarily boosts Bed Bath’s share price, the stock offering will eventually undercut it, which is what happened after the company announced another stock offering in February.

home goods retailer bankruptcy warning A series of disappointing quarters since January drained the company’s liquidity and left it grounded for life.

On Wednesday, it announced a $120 million lifeline provided by liquidator Hilco Global to enable it to get inventory back on your shelves In a last ditch effort to improve sales.

—CNBC’s Jesse Pound contributed to this report.