Bed Bath & Beyond (NASDAQ:BBBY)
As of 10:38 a.m ET on Wednesday, BBBY stock had fallen 8.1% as investors braced themselves for the worse after hearing that bondholders were hunkering down to shield themselves from a possible debt restructuring.
As a result of the pandemic lockdowns, Bed Bath & Beyond (NASDAQ:BBBY) is searching for methods to lessen its debt load because sales have not materialized as expected. The company had obtained over $850 million in liquidity as of the end of the previous month via additional loans it received from banks and other lenders; however, it is now examining how best to reorganize its debt portfolio to achieve optimal results.
Bondholders are concerned that any modifications to the structure of the debt might adversely affect their interests if bankruptcy proceedings are initiated.
Net sales dropped by 28% during the most recent quarter, while comparable sales fell by 26% compared to the same time a year earlier. The home goods chain is swiftly falling into disrepair. The gross margin hit 260 basis points as it continued to deteriorate alongside other margins.
According to the Wall Street Journal, BBBY stock is mulling through several alternative courses of action, one of which is a distressed debt swap. Under this plan, the retailer’s current bonds would be exchanged for new, longer-term debt or stock. It also mentioned the possibility that nothing might come of it.
What’s Next for BBBY Stock?
Bondholders of Bed Bath & Beyond are not willing to take any risks. Analysts have a growing pessimism about the likelihood of the retailer’s turnaround being successful. Bank of America analysts recently told investors that they anticipate the cash burn at the firm to continue.
Bondholders are concerned that their claims on BBBY stock (NASDAQ:BBBY) assets may become less secure if the business takes on further debt.
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