Troubled retailer Bed Bath & Beyond (BBBY) has defaulted on a credit line it has with JPMorgan Chase (JPM) and warned of a potential bankruptcy filing.
Shares of Bed Bath & Beyond plunged on January 26, prompting brief trading halts. The stock closed down 22% on the day at $2.52 U.S. per share. The stock has plunged 82% in the last 12 months.
In a securities filing, Bed Bath & Beyond said it is attempting to cut costs by lowering capital expenditures, closing stores and renegotiating lease deals with its landlords.
However, the company has warned that “these measures may not be successful.”
The home furnishing retailer owes $550 million U.S. under an asset-backed loan with JPMorgan Chase and $375 million U.S. to lender Sixth Street after expanding its credit facility last summer.
Bed Bath & Beyond’s debt load also includes nearly $1.2 billion U.S. in unsecured notes, which have maturity dates spread across 2024, 2034 and 2044 and have been trading at distressed levels.
The company has also been burning through cash. It used $890 million U.S. in cash during the nine months ended November 26. As of that date, Bed Bath & Beyond had $225.7 million U.S. in remaining cash.
Earlier in January, Bed Bath & Beyond issued a “going concern” notice that it may not be able to cover its expenses following a worse-than-expected quarter and could file for Chapter 11 bankruptcy protection from its creditors.
Bed Bath & Beyond also said that its board has named restructuring expert Carol Flaton as an independent director. She will earn $30,000 U.S. a month to help the company with its finances.
