Bed Bath & Beyond closes funding in attempt to avoid bankruptcy

Details: Bed Bath & Beyond is raising $225 million via an offering of Series A convertible preferred stock, warrants to purchase Series A convertible preferred stock and warrants to purchase the company's common stock.

• An additional $800 million of gross proceeds will be raised over time if certain conditions are met.
• The retailer added that it cannot give any assurances that it will receive all of the installment proceeds, however.

What's next: Bed Bath & Beyond will apply the net proceeds along with a $100 million drawn from its FILO facility towards repaying the outstanding amount under its revolving credit facility.

• The company was able to amend its credit agreement to waive existing defaults and to use the availability under its credit facilities to make the missed interest payment on its senior notes by March 3.
• The company can reborrow the repaid amounts under the revolver to fund general corporate purposes such as restocking inventory.

What they're saying: While the money will buy Bed Bath & Beyond extra time, without a credible turnaround plan the end result is still likely bankruptcy, says David Silverman, senior director at Fitch Ratings.