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Bed, Bath & Beyond's stock under $1, snarling additional funding

Published 03/21/2023, 12:45 PM
Updated 03/21/2023, 12:50 PM
© Reuters. FILE PHOTO: A shopping cart is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly

By Caroline Valetkevitch and Lance Tupper

NEW YORK (Reuters) - Shares of Bed Bath & Beyond Inc (NASDAQ:BBBY) edged higher in midday trading Tuesday but the stock remained under $1, leaving the home goods retailer at risk of losing additional funding from hedge fund Hudson (NYSE:HUD) Bay Capital Management, a pivotal investor.

Bed Bath & Beyond's stock dropped 21% on Monday to end at 81 cents after the company late Friday said it was seeking shareholder approval for a reverse stock split. After midday Tuesday, it was up 1% at 82 cents.

The company also reported late Friday shares outstanding as of March 15 of about 335 million, compared with 117 million reported in late January.

The struggling retailer reached an amended agreement with Hudson last week to temporarily lower the stock price threshold to $1 until April 3.

That level is down from an original threshold of at least $1.25, with the amendment aimed at allowing for up to $100 million additional funding in April 2023.

Bed Bath & Beyond last month said it was planning to raise some $1 billion through a complex offering of preferred stock and warrants in an effort to avoid bankruptcy.

"They were extended a lifeline," but its corporate bond levels are still showing signs of distress, said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

© Reuters. FILE PHOTO: A shopping cart is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly

"On January 31st, they were priced for immediate bankruptcy and now they're trading at 29 cents on the dollar," he said. "But any time bonds are trading below 50 cents on the dollar, there's always uncertainty involved."

The stock is down about 67% for the year to date, and on Monday its shares were officially removed from the S&P 600 index of small capitalization stocks.

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