Last week, Bed Bath & Beyond (NASDAQ:BBBY) announced that it would hold a special meeting of stockholders on May 9. The primary reason for the meeting is for shareholders to vote on a reverse stocks split in a range between 1-for-10 and 1-for-20.
“A failure to obtain shareholder approval for the Reverse Split Proposal will likely force us to file for bankruptcy as we will have insufficient Common Stock to enable us to raise additional equity financing,” said CEO Sue Gove.
This morning, the retailer released a new filing to address questions concerning the reverse split. Let’s get into the details.
BBBY Stock: Bed Bath Answers Reverse Split Questions
First, the company clarified that there were 428.09 million shares of BBBY stock outstanding as of March 27, the record date for the meeting. This means is that anyone buying shares after March 27 will not be eligible to cast a vote for the meeting. The total share count includes both domestic and international shares held, while some international brokerages may restrict voting on the meeting. Bed Bath & Beyond has advised shareholders to explore other brokers in the case of this occurrence.
The company also received several inquiries concerning naked short selling, to which it responded:
“The Company does not have specific access to information regarding any share lending or short selling transactions. While the Company is unable to confirm such activity, the Company denounces any market manipulation of its stock.”
Finally, any shareholder holding directly registered shares will soon receive more information concerning the meeting once Bed Bath & Beyond determines an approximate share count. The company added that it plans on addressing other information requests in future communications.
So, why exactly is the company pursuing a reverse split? It recently announced a $300 million common stock offering. However, there may be an insufficient number of authorized shares to fully enact the offering. A reverse split could act as a remedy to consolidate the number of shares to allow for more shares to be offered. As of April 3, the company had 260.32 million shares of authorized stock that were eligible to be issued.
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.
