Bed Bath & Beyond is Trying to Sell More Stock: WTF?

If Bed Bath & Beyond was half as creative with its merchandising as it is with its financial maneuvering maybe it wouldn’t be in such bad shape in the first place.

In yet another wild, totally unexpected twist to a saga that has had no shortages of them, the crashing-and-burning Big Box retailer announced after the market closed today that it was floating a stock offering that could raise a billion dollars…give or take a few 20-off coupons. The funds would be used to pay down a big chunk of its current debt, open up a little more space on its credit line and generally give it breathing space to try to work out its long list of problems.

This follows an insane day on Wall Street when the company’s share price more than doubled, climbing as high as just over $7 a share when it had opened the day at barely $3. It gave back some of that jump by the time the market closed, finishing up at $5.86, still up 92% for the day. These were still its highest prices since last fall.

But after the stock offering release which broke around 5pm Eastern time, the stock headed back in the other direction – and quickly. In the first few hours of after-hours trading it lost around 40% of its value, floating at around $3.60 by around 7pm. That’s more like the range it’s been trading it on and off for the past few weeks as speculation ran rampant that it was about to file for bankruptcy.

That’s why the stock offering seemed to be so unexpected. Companies about to file for chapter 11 bankruptcy – which generally wipe out the value of all their shares – rarely try to sell more of those shares…not to mention find buyers interested in buying them.

This offering, which is for convertible preferred securities and warrants, may carry some provisos that would put holders higher up the food chain should there be a filing. Nevertheless the company issued a statement saying it “cannot give any assurances that it will receive any or all of the proceeds” that would come from this stock sale.

And to further put a damper on this whole thing, it added that if this doesn’t fly it will “likely force it to file for bankruptcy protection.”

Given the sharp dive in after-hours trading it would seem that potential investors were underwhelmed by all of this. Whatever happens next – and that’s getting really, really hard to predict – there’s no disputing that Bed Bath & Beyond is not going down without a fight.