Feb 7 (Reuters) - Bed Bath & Beyond Inc said on Tuesday it had raised about $225 million in an equity offering and that it was expecting to receive $800 million more in future installments, in a move that could help it stave off bankruptcy.
Hudson Bay Capital Management is the lead investor in the share sale by the struggling retailer, two people familiar with the matter told Reuters earlier on Tuesday before the closing of the offering was announced.
Hudson Bay Capital is unrelated to Canadian department store chain Hudson's Bay Co.
The additional cash may offer the retailer a short window of only a few quarters to revive the business, Wall Street analysts said, adding that a weakening economy would diminish any chance of a successful turnaround.
"It just looks like a way of extending time in the hopes someone rescues them, but that looks a bit unlikely," said Chris Beauchamp, chief market analyst at IG.
"Having been on the edge of the meme stock frenzy, it's not surprising that this news has poked the embers of that particular mania."
Bed Bath & Beyond declined to comment earlier Tuesday on Hudson Bay Capital leading investment in the share sale. Hudson Bay did not respond to a request for comment. Bloomberg News first reported the Hudson Bay Capital development.
Reuters reported late last month that Bed Bath & Beyond was preparing to seek bankruptcy protection and had lined up liquidators to close additional stores unless a last-minute buyer emerged.
Prices on Bed Bath & Beyond bonds due in 2024 climbed to 24 cents on the dollar from around 5 cents, a level still indicating financial distress.
The offering "may be a Band-Aid but I'm not certain of all the makeup of their balance sheet. The problem is that they're probably not going to be a big turnaround story," said Robert Gilliland, managing director at Concenture Wealth Management.
Bed Bath shares rose 2.7% in extended trading, after closing down 49% on Tuesday.
They, however, closed more than 92% higher on Monday on strong retail interest and were the most traded on Fidelity's customer platform, with about 60% buy orders versus 40% sell.
A part of the meme stock phenomenon, Bed Bath & Beyond's shares surged to as high as $30 last year when activist investor Ryan Cohen took a stake in the company and pushed for changes.
Other meme stocks that were pumped up this year, including AMC Entertainment and video game retailer GameStop Corp, fell between 9% and 11% on Tuesday.
"We believe that recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know if or how long these dynamics will last," Bed Bath & Beyond said in a regulatory filing.
"The popularity of meme stocks could ebb and flow depending on the market's mood (but investors) just have to be careful about it, especially in a high-rate environment," said Callie Cox, U.S. investment analyst at eToro.
