Bed Bath & Beyond Picks Lender for Fresh Cash After Sales Slump

(Bloomberg) — Bed Bath & Beyond Inc. is closing in on a new loan that will give it breathing room as sales slump and it burns through cash.

Company management has picked a lending proposal after confidential talks with prospective investors for a new line of credit, according to people with knowledge of the private discussions.

The retailer is facing a shrinking cash pile and is falling behind on payments to vendors, prompting some suppliers to halt or restrict shipments. While the company became beloved by small-time investors, its equity rally quickly fizzled after the company’s top investor Ryan Cohen disclosed that he was selling his stake.

Representatives for Bed Bath & Beyond and company advisers Kirkland & Ellis and Lazard didn’t immediately respond to requests for comment. The Wall Street Journal earlier reported that the company had reached a deal.

Bed Bath & Beyond is mired in a deep sales slump, and its bonds change hands for less than half of face value amid concerns that the retailer’s turnaround effort has stalled. Its chief executive officer stepped down in June after the company reported an adjusted loss and a glut of inventory that will need to be marked down.

The retailer, based in Union, New Jersey, hired advisory firm Berkeley Research Group to help it focus on cash, inventory and balance sheet optimization. It also made plans to cut at least $100 million in planned capital expenditures. It ended May with $108 million of cash, down from $1.1 billion a year earlier.

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