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Bed Bath & Beyond Plummets After Stock and Warrant Offering

Updated: Feb 9, 2023

Bed Bath & Beyond (NASDAQ: BBBY) saw a significant drop in pre-market trading after the company priced an issue of preferred stock and warrants in order to exit the Chapter 11 bankruptcy process.

The stock was down 37% at $3.64 by 08:50 ET, undoing Monday's spike due to speculation on the pricing.

This pricing highlighted the dilution faced by existing shareholders as the company continues its restructuring efforts. The company is expected to raise approximately $225 million through an offering of convertible preferred stock and another $800 million through the sale of warrants. However, Bed Bath & Beyond cannot guarantee that it will receive all the proceeds of the offering.

The net proceeds will be used to repay outstanding loans and missed interest payments, with any remaining funds being utilized for general corporate purposes, including rebuilding the company's inventory. This is a crucial step for Bed Bath & Beyond as various suppliers had stopped doing business with the chain before its bankruptcy filing due to unpaid debts.

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