BASKING RIDGE, N.J. - Barnes & Noble Education, Inc. (NYSE: BNED), an educational solutions provider, announced the effectiveness of its registration statement for a $45 million equity rights offering, as confirmed by the Securities and Exchange Commission on May 14, 2024. This rights offering is a strategic move in a series of transactions aimed at reducing the company's debt and enhancing its financial position.
In connection with a definitive agreement with Immersion (NASDAQ:IMMR) Corporation (NASDAQ: IMMR) and other stakeholders, BNED anticipates receiving $95 million in new equity capital, comprising the rights offering and a $50 million investment from Immersion. These transactions are expected to provide BNED with approximately $75 million in net cash proceeds after transaction costs.
BNED's existing second lien lenders will convert around $34 million of principal and accrued interest into common stock, and the company has secured commitments to refinance its asset-backed loan facility with a $325 million facility maturing in 2028, which will improve BNED's financial flexibility and reduce annual interest expenses.
The rights offering involves issuing 900 million shares of common stock at $0.05 per share. Each record holder as of May 14, 2024, will receive one subscription right per owned share, granting the ability to purchase 17 new shares for each right held. Over-subscription rights are also available, allowing holders to buy additional unsubscribed shares at the same price.
Should any rights remain unexercised, standby purchasers led by Immersion, Outerbridge Capital Management, LLC, and Selz Family 2011 Trust will collectively purchase up to $45 million in shares not subscribed by stockholders.
Fractional shares will not be issued in the rights offering, and any such fractions will be rounded to the nearest whole share. The net proceeds are intended to cover transaction expenses and reduce the balance under BNED's asset-backed loan facility.
Rights certificates and the rights offering prospectus will be mailed to record holders around May 15, 2024. The subscription period will end on June 5, 2024, unless extended by the company. Unexercised rights will expire after this date and hold no value.
Shares issued through this offering will be listed on the New York Stock Exchange under the ticker BNED, but the subscription rights themselves will not be listed. The company has made no recommendation to stockholders regarding the exercise of these rights, leaving the decision to individual investors.
This rights offering is contingent upon stockholder approval at a special meeting scheduled for June 5, 2024. If not approved, the offering will be canceled.
This announcement is based on a press release statement.
InvestingPro Insights
Barnes & Noble Education, Inc. (BNED) is navigating a challenging financial landscape, as evidenced by recent strategic moves to strengthen its balance sheet. Investors considering the rights offering should be aware of several key metrics and insights from InvestingPro that may impact their decision.
InvestingPro data shows a market capitalization of $10.1 million USD for BNED, reflecting a relatively small equity base which may influence stock price volatility. The company's Price / Book ratio, as of the last twelve months ending in Q3 2024, stands at 0.1, suggesting that the stock is trading at a low multiple of its book value. This could indicate that the market is undervaluing the company's assets relative to its share price, an insight that value investors might find appealing.
However, the InvestingPro Tips highlight some concerns: BNED's stock has experienced a significant decline over the past year, with a 1 Year Price Total Return as of 2024 at -87.74%. Additionally, the company's short-term obligations currently exceed its liquid assets, which could pose liquidity risks. Analysts are not expecting the company to be profitable this year, and the stock is noted for its high price volatility.
For investors looking for a more in-depth analysis, InvestingPro offers additional tips that could provide further clarity on BNED's financial health and future prospects. Interested investors can make a more informed decision by accessing these insights at https://www.investing.com/pro/BNED. Moreover, users can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a total of 16 InvestingPro Tips for BNED.
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