Mattress Tub & Past sells $1B in inventory to keep away from chapter

Mattress Tub & Past reportedly has lined up buyers for a last-minute money infusion to assist the struggling home-goods retailer keep away from chapter — however consultants are skeptical whether or not the plan will work.

Hudson’s Bay Capital Administration has agreed to anchor a sale of most popular inventory that Mattress Tub & Past disclosed late Monday that might elevate greater than $1 billion, based on Bloomberg.

However, the retailer’s shares — which surged 92% to shut at $5.86 on Monday, fueled by the meme inventory crowd — had been not too long ago down by greater than 45% on Tuesday, teetering at $3.

“There may be slim to no probability that the plan they introduced yesterday will stave off a chapter submitting, as a result of the debt gap they’re in is simply too huge,” mentioned distressed debt knowledgeable David Wander, a companion with Tarter, Krinsky & Drogin.

“For those who purchased $BBBY at $5.75 you really should lose cash,” tweeted CNBC anchor Jim Cramer.

Tweeted the Maverick of Wall Road, “What the “geniuses” who’re chasing bankrupt corporations don’t perceive is that it’s only a matter of time earlier than these corporations use the pumps to dump inventory and lift a lot wanted money.”

Wander added, “disgrace on Mattress Tub & Past for profiting from the meme crowd who can’t management themselves from throwing good cash after dangerous shares.”

The corporate on Monday introduced a plan to keep away from chapter by securing a $100 million credit score line from one among its lenders – Sixth Road Companions – and approval to lift greater than $1 billion in the popular inventory sale, based on SEC filings. The funds can be used to pay down its $1.1 billion debt, the corporate mentioned.

On the similar time, the house items firm conceded in filings that if it “will doubtless file for chapter safety” if all of those transactions will not be “absolutely consummated.” 

Mattress Tub & Past — which defaulted on a mortgage from JPMorgan Chase in January, setting it on to a path in the direction of chapter — didn’t supply a lot hope that its plan will work.

“There are specific circumstances to our receipt of the proceeds at every closing, together with that our frequent inventory shall stay listed on a nationwide securities change, that we’ve enough licensed frequent inventory to difficulty the shares topic to such closing,” the submitting states, including that “Our present holders of frequent inventory can be considerably diluted by the issuance of the securities on this providing.”