It’s been a rough year for retailers and e-commerce stocks across the board, and Bed Bath & Beyond (NASDAQ:BBBY) is no exception. Shares of the well-known home goods retailer have declined about 80% year-to-date, and more pain may be on the way for 2023.
Today, the company announced that it would further extend its deadline to exchange convertible debt. The deadline was originally set for Dec. 5, and then it was pushed back to Dec. 19. Now, the deadline has been extended to Jan. 4.
InvestorPlace contributor Dana Blankenhorn notes that the offer was originally made on Oct. 18. If all of the debt holders accept the offer, 11.7 million new shares would be created, which would dilute existing shareholders in the process. As of Dec. 19, there are a total of 117.3 million shares outstanding.
The convertible debt eligible for exchange is as listed:
- 3.749% Senior Notes due 2024 for new 3.693% Senior Second Lien Secured Non-Convertible Notes due 2027 and/or new 8.821% Senior Second Lien Secured Convertible Notes due 2027.
- 4.915% Senior Notes due 2034 for new 12.000% Senior Third Lien Secured Convertible Notes due 2029.
- 5.165% Senior Notes due 2044 for New Third Lien Convertible Notes.
BBBY Stock: Bed Bath & Beyond Extends Convertible Debt Exchange Deadline
Following the completion of the exchange, the senior notes will be canceled. The current existing note holders own, in principal amount, $69 million in 2024 notes, $5.8 million in 2034 notes and $48.2 million in 2044 notes.
The increase in shares outstanding would mark a new regime change for Bed Bath & Beyond, as the company has engaged in consistent buybacks over the past decade. In 2010, there were a total of 263.26 million shares outstanding. Today’s figure of 117.3 million shares is less than half of that. That’s equivalent to a compound annual growth rate (CAGR) of -9.32%.
Meanwhile, the company is having quite a difficult holiday season. Supplier relationships have been hampered by undue and late payments. In addition, some suppliers have paused shipments entirely, with others having unpaid invoices from as far back as Jan. Bed Bath & Beyond sought to alleviate this by holding a meeting with top vendors.
This has led to empty shelves at a time when many are looking to shop for the holidays. Only time will tell if Bed Bath & Beyond is able to dig itself out of the hole.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
