Bed Bath & Beyond Inc.’s move to issue preferred stock is a “last gasp” effort to survive before filing for bankruptcy, according to Wedbush analyst Seth Basham, who warns that the equity would eventually be wiped out. “We see these capital-raising transactions as a ‘last gasp’ to survivebefore filing for bankruptcy protection where the common equity would likely be worthless,” he wrote, in a note released Tuesday.
Bed Bath & Beyond’s
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stock plunged 45.4% Tuesday, pulling back from strong gains Monday that saw the stock of the troubled retailer gain 92% in a move that swept up other meme stocks. The moves proposed by Bed Bath & Beyond aim to generate additional liquidity, satisfy the company’s defaulted loans and missed interest payments, and, most importantly, buy it more time, according to Basham. Wedbush slashed its price target on the stock to zero from $1 Bed Bath & Beyond said after the bell Monday it plans to sell convertible preferred stock as well as warrants to purchase common shares and convertible preferred stock. The company expected to raise at least $225 million in the sale, but hoped for more than $1 billion, according to a regulatory filing. Late Monday, the Wall Street Journal reported that the company had received investor commitments to raise $225 million of equity capital initially, with the rest of the more than $1 billion offering coming later, citing people familiar with the matter. The company has said it may have to file for bankruptcy and recently disclosed it was in default on loans that were called in. In a filing with the Securities and Exchange Commission on Monday, Bed Bath & Beyond
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disclosed that JPMorgan Chas …