Bed Bath & Beyond share prices soared today after reportedly securing investor backing as it tries to raise more than $1billion to stave off bankruptcy.
The ailing home goods store announced it was also planning a public offering as a part of its plan to pay off its large debts that have threatened the company's future.
If it fails to raise enough money by selling off its stock, Bed Bath & Beyond said it would be forced to bankruptcy and liquidate its assets.
Shares spiked 92 percent on Monday following the news, only to drop down 32 percent from the day's high by the close of trading.
Despite the financial woes dogging the company, its shares have been slowly climbing in recent weeks.
Bed Bath & Beyond has been closing locations and laying off staff over the last few months as its profits have dwindled in recent years.
Last week the company announced it's in default on its loans and doesn't have sufficient funds to repay what it owes.
Bed Bath & Beyond has said that it's in default on its loans and doesn't have sufficient funds to repay what it owes
Bed Bath & Beyond's shares rose 92 percent on Monday following the news, only to drop down 32 percent from the days high by the close of trading
To meet its $1billion capital raise, Bed Bath & Beyond was extended $100million in credit from a lender, and received $225million upfront in investor commitments.
Investors have agreed to provide the difference to meet more than $1billion in funding over time, according to the
Those funds coupled with the sell-off of company stock might be enough to keep the business afloat and avoid bankruptcy.
AMC Home Entertainment Holdings Inc.
followed a similar strategy to stay in business when movie theater revenue vanished during the pandemic.
The company was able to stay afloat after selling off at least $2billion of its stock.
Despite the promising news, the Bed Bath & Beyond also announced Monday it forecast sales to plummet up to 40 percent in the first quarter.
Bed Bath & Beyond has been closing stores and laying off staff as its profits have plummeted
Gustavo Arnal, 52, was facing a billion dollar lawsuit just one week before he died for allegedly inflating the price of Bed Bath and Beyond shares in a get-rich-quick scheme
Bed Bath & Beyond also announced it had hired a new chief financial officer, Holly Etlin, to replace its former CFO, Gustavo Arnal, 52, who died by suicide last fall.
Arnal threw himself off his New York City apartment building as he found himself at the center of a class action lawsuit brought by a group of shareholders who claimed they lost around $1.2billion when Arnal and majority shareholder Ryan Cohen engaged in a 'pump and dump' scheme.
The lawsuit, filed in the United States District Court for the District of Columbia on August 23, claimed Cohen had approached Arnal about a plan to control shares of Bed Bath and Beyond so they could both profit.
As part of the plan, the lawsuit claimed, Arnal 'agreed to regulate all insider sales by BBBY's officers and directors to ensure that the market would not be inundated with a large number of BBBY shares at a given time.'
He then allegedly issued 'materially misleading statements made to investors regarding BBBY's strategic company plans, financial condition...
and loan reports of shares holding and selling' to help increase share prices.
By the time Arnal sold over 42,000 shares in the company two weeks ago it was valued at $1 million, according to MarketBeat.com.
His death came at a difficult time for the company as it faced high inflation and a sagging economy.
The company had announced plans to close 150 stores, of its roughly 900, and lay off 20 percent of staff just two days before Arnal's death.
And back in June, CEO Mark Tritton was fired after sales plunged 25 percent in the first quarter.