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Bed Bath & Beyond Completes Public Equity Offering and Provides Strategic Update

Date: Feb 08, 2023 @ 07:54 AM
Filed Under: Retail

Bed Bath & Beyond announced the closing of an underwritten public offering (the "Offering") of (i) shares of the Company's Series A convertible preferred stock (the "Series A Convertible Preferred Stock"), (ii) warrants to purchase shares of Series A Convertible Preferred Stock, and (iii) warrants to purchase the Company's common stock. The Company received initial gross proceeds of approximately $225 million in the Offering and expects to receive an additional $800 million of gross proceeds in future installments, assuming certain conditions are met. The Company can provide no assurance that it will receive any or all of the future installments.

The net proceeds from this transaction will be used immediately to repay outstanding borrowings under the Company's credit facility, thereby fulfilling conditions set forth in an amendment to the credit facility waiving defaults thereunder that was entered into concurrently with the initial closing of the offering. The Company expects to reborrow loans under its amended credit facility to enable its strategic initiatives in fiscal 2023, which will be further supported by a realigned store footprint and cost structure.

The Company will continue to execute its customer-focused turnaround plans by optimizing its store footprint, investing in inventory, and pursuing infrastructure improvements. Specifically, the Company has initiated incremental store closures in its Bed Bath & Beyond banner with an ultimate operating goal of approximately 360 stores, in addition to approximately 120 buybuy BABY stores, across the U.S. In response to evolving shopping preferences today, this target store base includes the Company's most profitable locations and best geographic presence for customers that can enable an optimal omni-experience. The digital channel is expected to rise to a higher proportion of sales with improved channel profitability.

Sue Gove, President & CEO of Bed Bath & Beyond Inc. said, "This transformative transaction will provide runway to execute our turnaround plan. We continue to put our customers at the center of every decision, positioning Bed Bath & Beyond to meet and exceed their expectations, while resetting our foundation for near- and long-term success. We are optimizing our store fleet and supply chain and continuing to invest in our omni-always capabilities. This will enable us to better serve our customers, and grow profitably, by directing merchandise where and how they want to shop with us. We are also prioritizing availability of leading national and emerging direct-to-consumer brands our customers know and love. As we make important strategic and operational changes, we will continue to take disciplined steps to enhance our cost base and improve our financial position."

The Company's go-forward channel mix will facilitate better execution of inventory prioritization and distribution, particularly across its smaller brick-and-mortar store footprint. The Company will also be pursuing asset-light inventory management strategies to drive growth, including vendor-direct-to-consumer, marketplace, and the potential for innovative collaborations.

Finally, the Company has identified significant opportunities across its infrastructure and operations. Supply chain, technology, expense structure, and business processes will continue to be streamlined as the Company realigns its operational foundation. These changes will help the Company strengthen business partnerships with suppliers, real estate, and service partners, who remain a priority.

Ms. Gove continued, "Our Board and management, working closely with advisors, evaluated every strategic alternative available to us to reach the appropriate solution to maximize prospects for all stakeholders in our pursuit of long-term value creation. We are determined to achieve our goals and we are grateful to our thousands of associates and many partners for their dedication to our beloved brands, Bed Bath & Beyond and buybuy BABY."

B. Riley Securities was sole book-running manager for the Offering.

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