The struggling dwelling items retailer has been warning of a possible chapter since early January, when it issued a “going concern” discover that it could not have the money to cowl bills after a dismal vacation season.
Mattress Bathtub has been hanging on by a thread ever since however has refused to go down with out a battle. It secured what was then-considered a Hail Mary inventory providing in early February that was anticipated to infuse greater than $1 billion in fairness into Mattress Bathtub, however the plan faltered and introduced in solely $360 million, the corporate mentioned.
On the finish of March, Mattress Bathtub introduced one other inventory providing it hoped would herald $300 million, however that information despatched the share value tumbling and it struggled to lift the funds it hoped the providing would offer. As of April 10, the corporate had offered roughly 100.1 million shares and raised solely $48.5 million.
In filings, the corporate warned if it didn’t increase the anticipated proceeds from the providing, it could possible should file for chapter safety.
Days after the second inventory providing was introduced, Mattress Bathtub mentioned it had partnered with liquidator Hilco International to spice up its stock ranges. Below the settlement, Hilco subsidiary ReStore Capital agreed to purchase as much as $120 million in merchandise from the corporate’s key suppliers after relationships with Mattress Bathtub’s distributors soured due to its liquidity points.
Nevertheless, the plans finally proved futile and weren’t sufficient to maintain the lights on.
The retailer has struggled to keep up relationships with its distributors and has been grappling with low stock ranges, lagging gross sales and a quickly dwindling money pile.
Going into the vacation season, Mattress Bathtub had issue retaining its cabinets stocked and due to its liquidity points, some distributors started asking for prepayments, the corporate mentioned in securities filings.
CEO Sue Grove had been main the corporate by way of an tried turnaround she hoped may save the enterprise, however these efforts coincided with excessive inflation that affected shopper spending whereas rising rates of interest slowed the housing market.
Plus, customers who had spent 2020 and 2021 staying at dwelling and updating their dwelling areas amid the pandemic have been now spending on journey, consuming out and different out-of-home experiences.
In mid-January, the corporate was trying to discover a purchaser keen to maintain it afloat with an infusion of money. Quickly, although, Mattress Bathtub revealed in a securities submitting that it didn’t have sufficient money to pay its money owed and had defaulted on its credit score line with JPMorgan.
The corporate was in a position to make its curiosity funds utilizing funding gained from the primary inventory providing, however on the time it warned it could “possible” should file for chapter and see its belongings liquidated if the deal didn’t go as deliberate.
The corporate had loans with JPMorgan and lender Sixth Avenue that have been diminished in late March after its second inventory providing was introduced. On the time, its whole revolving dedication decreased from $565 million to $300 million and its revolving credit score facility was diminished from $225 million to $175 million. Below the diminished credit score agreements, Mattress Bathtub was on the hook for month-to-month curiosity funds.
The corporate mentioned it was trying to decrease prices by lowering capital expenditures, closing shops and negotiating lease offers however warned in filings the efforts “might not be profitable.”
At a preferred Mattress Bathtub outpost in New York Metropolis, a since laid-off staffer lately advised CNBC that employees have been standing round not understanding what to do after the corporate out of the blue lower off in-store pickup and deliveries on the location. The employee was advised liquidators could be coming the next day and shortly realized staff wouldn’t obtain severance after greater than twenty years with the corporate.
“It was simply so quick,” the employee mentioned.