What happened
Shares of Bed Bath & Beyond (BBBY +0.00%) were moving higher today after the struggling retailer began a debt-exchange offer, with the aim of buying the company more time in its turnaround and improving liquidity. As of 11:08 a.m., Bed Bath & Beyond shares were up 3.2% after gaining as much as 6% earlier in the session.
OTC: BBBY
Key Data Points
So what
In a press release this morning, Bed Bath & Beyond said it was offering several note exchanges, including a 3.749% Senior Notes due in 2024 for 3.693% notes, due in 2027, and/or new 8.821% Senior Second Lien Secured Convertible Notes, also due 2027. It also offered exchanges for notes due in 2034 and 2044, though the 2024 debt is the most important, as that's the next maturity it faces. Without increased liquidity before then, the company could default on that debt.
Interim CEO Sue Gove said: "By proactively focusing on our Senior Notes, we also intend to address the maturity of our nearest-term 2024 Notes and any impact they may have on our current and future business. This transaction is intended to create greater stability and flexibility in our business, which we believe benefits all stakeholders."
Now what
Bed Bath & Beyond is in the middle of a desperate attempt at a turnaround, as sales have plunged and it burned $809 million in free cash flow in the first half of the year. Though the company expects that number to improve in the second half, it still faces a number of challenges in front of it, including pushing back its debt maturities.
How its creditors respond could offer investors some insight into the company's chances of surviving the current cash crunch. Based on its most recent report, however, the retail-stock's prospects do not look good.
