Bed Bath & Beyond agrees to debt exchange with bondholders

Bed Bath & Beyond entered into a deal with bondholders in which they collectively exchanged $155 million in principal amount of outstanding bonds for 14.5 million shares of common stock, the retailer announced.

Why it matters: The distressed debt exchange addresses some of the home goods retailer's debt load, perhaps buying it more time as it attempts to execute a turnaround and avoid bankruptcy.

• It follows negotiations that kicked off in October after the company made its initial offer composed of secured notes.

Details: The bondholders included institutional holders of its 3.749% senior unsecured notes due 2024 as well as 4.915% senior notes due 2034 and 5.165% senior notes due 2044.

• About $69 million of 2024 notes, $5.8 million of 2034 notes and $48.2 million of 2044 notes were swapped for 11.7 million shares of common stock.
• The exchanges were conducted as private placements and will cancel out the corresponding debt.
• The transaction is expected to close on Nov. 16.

Yes, and: The retailer had previously announced that $9.5 million of 2034 notes and $22 million of 2044 notes were exchanged for 2.8 million shares of common stock.

What they're saying: "Building on our bond exchange transaction from last week, we are pleased to announce additional progress towards greater financial flexibility, with further reduction of our long-term debt, particularly our nearest-term 2024 notes," said Sue Gove, Bed. Bath & Beyond's CEO, in a statement.

The big picture: High-yield default activity has been "muted" according to Fitch Ratings since Bausch Health’s $5.6 billion distressed debt exchange at the end of September.

• But with Rite Aide's distressed debt exchange slated for Dec. 2, expect an uptick in out-of-court restructurings, it said.
• Mountain Province Diamonds and Diebold Nixdorf announced distressed debt exchanges that are expected to conclude by the end of this year.