Bed Bath & Beyond faces default notice from JPMorgan
JPMorgan has issued a notice of default to Bed Bath & Beyond, as the US home goods retailer struggles to repay its debts of over $1 billion. The company revealed in a Securities and Exchange Commission filing on Thursday that the bank had determined that the company had breached its loan covenants and was now demanding the repayment of all outstanding loans.
The company had approximately $1.1 billion in borrowings across three credit facilities at the end of November. This development brings the company closer to the possibility of bankruptcy.
The company announced that they currently do not possess enough resources to repay the credit facilities and as a result, they will explore all options including restructuring their debt under the US bankruptcy code.
According to their financial statements from January, the retailer had a cash balance of $225.7mn as of November 26th. A company spokesperson stated that they are working with their advisers and taking action to effectively manage their business while they evaluate all potential paths and strategic alternatives. They also mentioned that they will keep all stakeholders updated as their plans develop and are finalized.
Bed Bath announced at the beginning of January that it was facing difficulties in its business operations and was considering options such as filing for bankruptcy and selling assets. The company experienced difficulties in acquiring inventory for the winter holidays and reported a decrease in customer traffic, resulting in a net loss of $393 million during its fiscal third quarter.
The default notice could potentially hinder the company’s efforts to find a buyer or sell assets to regain financial stability.
In a filing, the company stated, “These covenants could impose significant limitations and restrictions on our operations and finances, including restrictions on our ability to enter into particular transactions such as asset sales and acquisitions, and to engage in other actions that we may believe are advisable or necessary for our business.”
On Thursday, shares of Bed Bath & Beyond experienced a significant drop, plummeting as much as 27% after the company’s filing was made public. Despite this, the company’s shares closed at a 22.2% decrease, with a final value of $2.52.
This follows a tumultuous period of trading for the company, with shares hitting an all-time low of $1.31 on January 6th. Despite this, the company’s shares have seen a slight increase of 0.4% in the year 2023.
In an effort to remain operational, Bed Bath & Beyond announced in August that they would be closing 150 underperforming stores and have recently implemented cost-cutting measures, including reducing headcount and cutting up to $100mn in expenses.