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Bed Bath & Beyond is looking to buy itself time to pay some of its debts with the announcement of a bond exchange offer.
The struggling home goods retailer offered to buy back three groups of senior unsecured notes, including one group due in 2024 for which the company is offering new notes due in 2027 that come with varying interest rates and terms.
The retailer is also offering noteholders early payments for those that participate in the exchange.
Interim CEO Sue Gove said in a press release that “this transaction will put us in a stronger financial position going forward by significantly reducing our debt and interest expense upon a successful completion.”
Gove also pointed to the 2024 notes specifically, saying the company aimed to “address the maturity of our nearest-term 2024 Notes and any impact they may have on our current and future business.”
S&P Global Ratings labeled the offered exchange as “distressed” and “tantamount to a default,” as it offers different terms and lower repayment than the original notes.
Following the announcement, S&P downgraded Bed Bath & Beyond’s corporate credit rating to CC from CCC.
Analysts with the ratings agency said in a release that “the noteholders will receive far less than they were originally promised” and added that “we view the offers as distressed rather than opportunistic because of [Bed Bath & Beyond]’s very weak operating results this year.”
As it grapples with sharply declining sales and increasing losses, Bed Bath & Beyond also secured new financing in August in the form of an expanded asset-based facility and new loan to help fund its turnaround efforts. The company then also announced store closures and layoffs as it tries to stem losses.