Bed Bath & Beyond (BBBY) announced in a filing that it was in default on loans that had been called in, which caused a more than 20% decline in share price and a suspension of trading on Thursday afternoon.
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Background
After being faced with having its stock delisted for failing to submit the statutory report on time, the struggling store finally submitted its quarterly report to the U.S. Securities and Exchange Commission on Thursday at about 2:30 p.m. Eastern time.
The petition discloses that Bed Bath & Beyond BBBY, -22.22% had defaulted on loans earlier this month and that banker JP Morgan Chase & Co. JPM, +0.62% had told management on Wednesday that the debt was due immediately.
The petition states that, among other things, the company’s inability to pay an overpayment and meet a financial condition on or around January 13, 2024, caused certain events of default under the company’s credit facilities to be triggered.
Price Drop causing a Halt.
The administrative agent under the Amended Credit Agreement notified the Company on January 25, 2024, that the principal balance of all outstanding loans under the Credit Facilities, along with accrued interest thereon, the FILO Applicable Premium, and all fees (including, for the avoidance of doubt, any break funding payments), as well as other obligations of the Company accrued under the Amended Credit Agreement, are due and payable.
Up until roughly five minutes after the file was made public, shares had been trading between Rs 265.11 and Rs 283.06 on the day. Then, the price of the shares rapidly dropped, causing a halt. Between 2:46 and 3:14 p.m., the stock was halted three times and dropped as low as Rs 171.30 before closing at Rs 205.56, a 22.2% daily loss.
The ailing company acknowledged earlier this year that it may need to file for bankruptcy and has “serious uncertainty” about its “ability to continue as a going concern.” The home goods giant added that it anticipates posting weaker sales for the most recent quarter than analysts had predicted.
2022: A Tragedy for BBBY
A Bed Bath & Beyond representative wrote in an email on Thursday, “As we explore all options and strategic choices, we continue to work with our advisors and implement initiatives to manage our business as effectively as possible.” “As is standard procedure, we don’t address rumors. All interested parties will be kept informed as our ideas evolve and are completed.
Tragic events have also befallen Bed Bath & Beyond (BBBY). Gustavo Arnal, the company’s chief financial officer, committed suicide by jumping to his death from a New York tower in August 2022.
The stock of the company has dropped 86.1% over the past 12 months, exceeding the 18.9% decline of the S&P 500 Index SPX, +1.10%.
In August, Ryan Cohen, an activist investor and the chairman of GameStop Corp., announced that he is selling a significant portion of his shares in Bed Bath & Beyond BBBY, sending the stock down lower from its peak in 2022.
As the retailer reported a weak holiday season and announced intentions to close stores, Bed Bath & Beyond BBBY stock has gained popularity among “meme” traders and short sellers, who have been betting on opposing sides of the trade. In the last year, shares have fluctuated between a high of Rs 2452.08 and a low of Rs 103.59, falling 81.8% in total. In the previous 12 months, the S&P 500 index SPX, +1.10% had been down 7.7%.
