As Bed Bath & Beyond continues its dogged effort to avoid bankruptcy, the home goods retailer announced Tuesday that it has set a special record date for payment of interest due Feb. 1. The company said the record day will be Feb. 27 and it will pay interest on senior notes on Feb. 28. This comes after a hedge fund stepped in earlier this month to prop up the struggling company for the time being.
The interest payments are 3.749 percent on senior notes due 2024, 4.915 percent on senior notes due 2034 and 5.165 percent on senior notes due 2044. Bed Bath & Beyond has pre-funded the full amount of the interest to be paid to holders of senior notes with The Bank of New York Mellon, trustee of the senior notes.
Bed Bath & Beyond will use its new cashflow created by a Series A stock fund offering announced earlier this month. Hedge fund Hudson Bay Capital Management purchased the $225 million worth of shares, along with $800 million through the issuance of securities requiring the holder to purchase shares of Series A preferred stock in future installments.
Shortly after the deal was announced, Bed Bath & Beyond filed a prospectus amendment with the Securities Exchange Commission (SEC), warning that despite the funding it had just secured, Chapter 11 bankruptcy was still a possible option. The filing pointed to the structure of the deal being processed through multiple closings or tranches, saying, “We need the proceeds from the transactions to pay our outstanding obligations under our credit facilities and senior notes and to operate our business. And we expect that we will likely file for bankruptcy protection if the transactions are not consummated.”
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But for the time being, it appears things are going a bit more smoothly for the troubled retailer.
“Building on the transformative equity financing we announced earlier this month, we continue to work on improving our financial position and optimizing value for all our stakeholders,” said Bed Bath & Beyond CEO Sue Gove in a press release posted on the company’s website Tuesday. “Today’s announcement is an important step in resetting our operational and financial foundation and meeting our commitments. We remain focused on utilizing our current and future financing to execute our turnaround plans and restore our position with customers.”