Bed Bath & Beyond Inc said on Thursday it had received a notice of default on its loan from JPMorgan Chase Bank N.A., triggering a 22% slump in its shares.
The company said in a regulatory filing it does not have sufficient resources to repay the amounts under the credit facilities, adding it will consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code.
The home goods retailer said earlier this month it was exploring a range of options to address its plunging sales that included declaring bankruptcy.
“While not completely unexpected, today’s default notice… underlines the company is living on both borrowed time and money,” said Neil Saunders, managing director of GlobalData.
“Its fate will now ultimately be decided by creditors who are demanding repayment of some debt and further collateral.”
The bank has determined to exercise rights such that all outstanding loans under credit facilities and other obligations of Bed Bath & Beyond under its amended credit agreement are due and payable immediately, according to the filing.
JPMorgan declined to comment.
The retailer’s outstanding borrowings under an asset-backed loan and first-in-last-out loan (FILO) were $550 million and $375 million, respectively, as of Nov. 26. The company locked in the $375 million FILO from investment firm Sixth Street in August.
Bed Bath & Beyond posted a much bigger-than-expected quarterly loss this month and also announced more job cuts to trim costs.
The company’s shares fell 2% in extended trading on Friday. They had rallied at the start of the year as individual investors piled in. (Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)