Bed Bath & Beyond Inc.’s white knight might be a hedge fund, but the rescue wouldn’t have happened if it wasn’t for the meme traders who made the logic behind the deal possible, WSJ Pro Bankruptcy reported. Even as Bed Bath & Beyond tumbled toward what seemed like a sure bankruptcy — shutting down stores, missing interest payments and having its credit lines frozen — retail investors continued to bet that the iconic home-goods retailer could defy the odds and survive to eke out some equity value. Even though they lacked the sustained, gravity-defying heights that the shares of GameStop Corp. and AMC Entertainment Holdings Inc. enjoyed during their meme-stock heydays, Bed Bath & Beyond’s shares have traded at high volumes and have repeatedly delivered meme-driven spikes in the past month. For Hudson Bay Capital Management LP, the $19 billion Greenwich, Conn.-based hedge fund that gave Bed Bath & Beyond an 11th-hour lifeline this week, the liquidity provided by the actively traded market for the stock means that the hedge fund will likely have options to monetize its position, so long as the retailer’s business operations don’t melt down further and its shares plunge to penny-status. It is rare for a distressed company to obtain a last-minute rescue via an equity raise, as it is much riskier to invest in a troubled company by buying stock that, unlike a senior loan, doesn’t have a claim on collateral. Even while it teetered on the brink of bankruptcy, AMC bagged a ton of meme money by selling shares as its star rose on social media, though the movie-theater chain never came as close to chapter 11 as Bed Bath & Beyond did by actually missing bond payments. Bed Bath & Beyond on Tuesday priced its equity offering led by Hudson Bay and some other investors, in which the investors provided $225 million upfront and are committed for another $800 million over the next 10 months granted that the company meets certain conditions, such as satisfying its debt obligations. Bed Bath & Beyond plans to use some of the proceeds to repay its revolving credit line and to help build back its inventory, according to a securities filing.
