Bed Bath & Beyond bondholders concerned with debt exchange
Yahoo Finance Live anchors discuss the concerns of Bed Bath & Beyond bondholders as the company attempts to stave off bankruptcy.
Video Transcript
JULIE HYMAN: Let's talk about one more mover this morning, and this one also has to do with debt, by the way. It's Bed Bath & Beyond. We're watching those shares, as there are concerns from bondholders surrounding a potential exchange deal.
As the company looks for ways to ease its debt, sales are continuing to struggle. The company said in a securities filing last week the transactions could take other forms or might not be launched at all. "The Wall Street Journal" is reporting that its financing advisor Perella Weinberg Partners is working on some kind of credit deal here, working with holders of the company's unsecured notes, due in 2024, to try to restructure this in some way.
BRIAN SOZZI: Yeah. And I would argue that-- totally get the market's response here, but this is not even news. If you read a company's earnings release, all this news is on the bottom. And if you really want to dig deeper, go into Bed Bath & Beyond's 10-Q. Sec.gov.
Pull up their ticker symbol. Read the earnings release. You would understand that all of this is coming right at you. And they said on there, we are considering liability management transactions, with particular focus on 2024 bonds. So what did I do? I went back to their annual report.
They have about almost $300 million in debt coming due by 2024. That is a huge amount of money this company is going to have to pay back at a time where it is hemorrhaging cash. It doesn't have much cash on their balance sheet. So they need to do something. What I question is, what do they do?
In a rising interest rate environment, how could they exchange it for anything cheaper than the rate they already have on this debt, which is about 3.7%?
BRAD SMITH: And aside from the financing, what of the consumer trends is actually going to change over that time, too? They put this out within their most recent quarterly results, as well. The continued trends in customer traffic-- they didn't give any sense that would actually shift or pivot anytime soon.
And so you're going to continue to see some of the-- and hope that there's at least a deceleration of the declines-- the comp sales decline of 28%, legacy merchandise disassortment-- or assortment, rather-- out-of-stock inventory, continued trends in customer traffic, as we mentioned. That hit both in-store and online.
And so what is actually changing in the consumer mindset and the relationship with Bed Bath & Beyond to even make sure that anybody who is going into buying some of the debt offering that they would put out there would have any confidence that they're actually going to get that money back later on?
