Mattress Bathtub & Past defaults on credit score line, warns on money owed

A “Retailer Closing” banner on a Mattress Bathtub & Past retailer in Farmingdale, New York, on Friday, Jan. 6, 2023.

Johnny Milano | Bloomberg | Getty Pictures

Mattress Bathtub & Past mentioned Thursday it does not have sufficient money to pay down its money owed and it has defaulted on its credit score line with JPMorgan, warning as soon as once more of a possible chapter.

Shares of Mattress Bathtub plunged Thursday afternoon, prompting temporary buying and selling halts. The inventory closed 22% down with a market cap of about $295 million, though it traded increased Friday morning.

In a securities submitting, the struggling dwelling items retailer mentioned it “doesn’t have adequate assets to repay the quantities underneath the Credit score Amenities and it will lead the Firm to contemplate all strategic alternate options, together with restructuring its debt underneath the U.S. Chapter Code.”

Mattress Bathtub is making an attempt to chop prices by reducing capital expenditures, closing shops and negotiating lease offers with its landlords however warned “these measures might not be profitable.”

The most recent submitting is one other signal that point is working out for Mattress Bathtub, as gross sales lag and money owed pile up for the cash-strapped retailer. It comes at a time that inflation is weighing on shoppers’ wallets and buyers put their discretionary {dollars} in the direction of experiences, like eating out or reserving journeys, over dwelling items.

Amid powerful macro challenges, Mattress Bathtub’s distributors tightened their credit score phrases and lower limits whereas requiring earlier funds throughout its fiscal second quarter, which prevented the corporate from correctly stocking its stock forward of the vacation season, the submitting states. Some distributors required prepayments, the corporate mentioned.

The corporate owes $550 million underneath its asset-backed mortgage with JP Morgan and $375 million to lender Sixth Avenue after increasing its credit score facility final August.

Mattress Bathtub’s debt load additionally contains almost $1.2 billion in unsecured notes, which have maturity dates unfold throughout 2024, 2034 and 2044, and have been buying and selling at distressed ranges. The corporate mentioned beforehand it wasn’t capable of refinance parts of that debt lower than a month after it informed buyers it deliberate to take out extra credit score to pay down its obligations.

The corporate has been burning via money in latest quarters. It used $890 million in money through the 9 months ended Nov. 26, the corporate reported Thursday. As of that date, Mattress Bathtub mentioned it had $225.7 million remaining in money.

The replace Thursday comes a number of weeks after the retailer issued a “going concern” discover that it could not have the ability to cowl its bills following a worse-than-expected quarter. 

Mattress Bathtub has been exploring its choices in latest weeks. The retailer has been in discussions to nail down financing that will hold it afloat if it had been to file for chapter, CNBC beforehand reported.

The corporate is also within the midst of a sale course of in hopes of maintaining its namesake chain and Buybuy Child enterprise alive. As well as, the corporate has been making ready for a possible chapter 11 submitting within the U.S. Chapter Court docket in New Jersey, CNBC beforehand reported.

In one other submitting Thursday, Mattress Bathtub mentioned its board named restructuring skilled Carol Flaton an unbiased director. She is going to make $30,000 a month, “payable in money prematurely,” the submitting mentioned.

Mattress Bathtub & Past’s inventory has fallen roughly 80% within the final 12 months.

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