The unusual $1 billion financing arrangement—with $225 million upfront and installments paid over the rest of the year—will buy the unprofitable retailer more time to fix its business. The hedge fund stands to profit as long as the company can stay out of bankruptcy court this year and its stock stays above 72 cents.
Investors, employees and vendors are divided on whether it will be enough. Bed Bath & Beyond lost more than $1 billion in the nine months ended on Nov. 26. It has projected steep sales declines for another quarter and needs to stem its losses to avoid burning through its rescue package, as it did with a September financing deal.
The company’s stock, which was trading near $6 the day the rescue was announced, has fallen back below $2 this week. The bonds are trading at between 11 and 27 cents on the dollar, according to Finra data.