Bed Bath & Beyond secures new financing as it restructures

Bed Bath & Beyond secured $500 million in new debt financing as it shores up its balance sheet, and it's chosen not to sell its Buybuy Baby banner — yet.

Why it matters: The financing provides much-needed liquidity, reassuring nervous vendors as BBBY stocks up for the all-important holiday season.

Details: The debt package includes a $375 million first-in, last-out (FILO) loan from Sixth Street Partners.

• It also expanded its revolving credit facility by $125 million, to $1.13 billion.
• And it filed a Form S-3 to potentially sell up to 12 million shares of common stock, the proceeds of which could repurchase or repay some debt.
• Cleary Gottlieb is serving as legal advisor on the share offering, while Jefferies is serving as sales agent.
• Shares are down more than 20% in morning trading.

Yes, and: A source familiar with the deal tells Axios' Dan Primack that Sixth Street was among six bidders for the high-yield loan, in a JPMorgan-led process. It adds that the loan isn't contingent on BBBY's plans to sell new shares.

• Sixth Street has a business that’s dedicated to direct lending, with retail ABL being a long-term theme.

What's happening: Bed Bath & Beyond is closing 150 underperforming stores and laying off 20% of employees across corporate and supply chain tiers.

• The retailer is also reducing its private label brands by about a third — including nixing Haven, Wild Sage and Studio 3B — but will keep Simply Essential, Nestwell, Our Table, Squared Away, H for Happy, and Everhome.
• BBBY is reverting to a national brand strategy, though execs said during a call with analysts today that it will offer exclusive products through those renewed partnerships.
• In addition, Bed Bath & Beyond will add DTC brands not widely available for sale, a key differentiator in its move away from private labels, it said.
• The company is receiving financial advice from turnaround specialist Berkeley Research Group and investment bank JPMorgan, as well as legal advice from bankruptcy specialist Kirkland & Ellis.

• And it's hired a strategic advisor to evaluate its supply chain, noting it must shorten shipping times.

Between the lines: The home goods retailer burned through $500 million in Q1 and was subsequently downgraded by Moody's and S&P.

• As the company noted during the call, many vendors asked for more stringent terms, which typically entails requiring some payment up front and would eat away at available cash.

Of note: Bed Bath & Beyond has chosen not to sell Buybuy Baby, saying it has greater value to shareholders as part of the company's portfolio.

• The retailer isn't ruling it out entirely: "The board of directors' strategy committee will continue to monitor the Buybuy Baby business as it preserves optionality and future value creation."

💭 Richard's thought bubble: Amid declining retail valuations, a sale of Buybuy Baby in today's market probably wouldn't have fetched a premium price.