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Bed Bath & Beyond Lands $1 BILLION Settlement to Save Startup from Bankruptcy: Shares Soared 92% as Traders Hope Firm Avoid Liquidation Just Months After Former CFO jumped to his death
- In addition to the financing, Bed Bath & Beyond will begin selling its shares.
- Shares soared 92 percent today before falling 32 percent from that high.
- If the financing and sale fail, the company will be forced to declare bankruptcy.
Bed Bath & Beyond share prices soared today after securing investor backing as it tries to raise more than $1 billion to avoid bankruptcy.
The troubled home goods store announced it was also planning a public offering as part of its plan to pay off its heavy debts that have threatened the company’s future.
If it fails to raise enough money by selling its shares, Bed Bath & Beyond said it would be forced to file for bankruptcy and liquidate its assets.
Shares rose 92 percent on Monday after the news, only to fall 32 percent from the day’s high at close of trading. Despite the company’s financial problems, its shares have been rising slowly in recent weeks.
Bed Bath & Beyond has been closing locations and laying off staff in recent months as its profits have declined in recent years. Last week, the company announced that it is in default on its loans and does not have sufficient funds to pay what it owes.
Bed Bath & Beyond has said it is in default on its loans and does not have enough funds to pay what it owes.
Shares of Bed Bath & Beyond rose 92 percent on Monday after the news, only to fall 32 percent from the day’s high at close of trading.
To meet its $1 billion capital increase, Bed Bath & Beyond received $100 million in credit from a lender and received $225 million in advance commitments from investors.
The investors agreed to provide the difference to cover more than $1 billion in financing over time, according to the Wall Street Journal.
Those funds, along with the liquidation of company stock, could be enough to keep the business afloat and avoid bankruptcy.
AMC Home Entertainment Holdings Inc. followed a similar strategy to stay in business when revenue from movie theaters disappeared during the pandemic.
The company was able to stay afloat after selling at least $2 billion of its shares.
Despite the promising news, Bed Bath & Beyond also announced Monday that it expects sales to plunge as much as 40 percent in the first quarter.
Gustavo Arnal, 52, was facing a multi-billion dollar lawsuit just a week before he died for allegedly inflating Bed Bath and Beyond’s share price in a get-rich-quick scheme.
Bed Bath & Beyond also announced that it had hired a new CFO, Holly Etlin, to replace its former CFO, Gustavo Arnal, 52, who committed suicide last fall.
Arnal threw himself out of his New York City apartment building when he found himself at the center of a class action lawsuit brought by a group of shareholders who claimed they lost about $1.2 billion when Arnal and majority shareholder Ryan Cohen got involved. in a ‘pump and dump’ scheme.
The lawsuit, filed in the United States District Court for the District of Columbia on August 23, claimed that Cohen had approached Arnal about a plan to control the shares of Bed Bath and Beyond so that they could both make a profit.
As part of the plan, according to the lawsuit, Arnal “agreed to regulate all insider trading by BBBY officers and directors to ensure that the market is not flooded with a large number of BBBY stock at any given time.”
He then allegedly issued ‘materially misleading statements made to investors regarding the company’s strategic plans, BBBY’s financial condition… and reports of holding and selling shares’ to help drive up stock prices.
When Arnal sold more than 42,000 shares of the company two weeks ago, it was valued at $1 million, according to MarketBeat.com.
His death came at a difficult time for the company as it faced high inflation and a declining economy. The company had announced plans to close 150 stores, out of its roughly 900, and lay off 20 percent of staff just two days before Arnal’s death.
And in June, CEO Mark Tritton was fired after sales fell 25 percent in the first quarter.