Bed Bath & Beyond Inc. made a debt-exchange offer as the home-goods chain looks to ease its financial burdens amid a sales drop, the Wall Street Journal reported. The series of exchanges will help extend debt maturities and reduce interest expenses, the retailer said on Tuesday in a filing with the Securities and Exchange Commission. As part of the offer, the existing bonds maturing 2024 will be exchanged for new second-lien secured notes due in 2027. Holders have an option to receive new notes at par for a lower 3.693% coupon, or take a 59% haircut on the principal for new debt that is convertible into equity with a higher 8.821% interest, according to the filing. The unsecured notes maturing in 2034 and 2044 are offered to be exchanged for new third-lien debt carrying a 12% interest rate. Holders that accept the offer will take a roughly 78% discount to the face value. Holders of the bonds have until Nov. 15 to accept the offers. “We believe this transaction will put us in a stronger financial position going forward by significantly reducing our debt and interest expense upon a successful completion,” said interim Chief Executive Sue Gove. S&P Global Ratings said it considered the debt exchanges as “tantamount to a default” because the noteholders will receive less than they were originally promised. The ratings company cut Bed Bath & Beyond’s credit rating further to a level where, while default has not yet occurred, it is “expected to be a virtual certainty.” On Tuesday, Bed Bath & Beyond’s 2024 notes traded at 31.25 cents on the dollar and the notes due in 2034 last changed hands at 15 cents on the dollar, according to data compiled by the Financial Industry Regulatory Authority.
