Why Barnes & Noble Education Shares Are Diving Today

Zinger Key Points
  • Barnes & Noble Education secures $95 million in capital through an equity investment deal with Immersion Corporation and partners.
  • Plans include debt reduction, net cash proceeds of $75 million and refinancing commitments to bolster financial stability.

Barnes & Noble Education, Inc. BNED shares are trading lower after it announced a short-term shareholder rights plan and a new equity investment.

In particular, the company inked a definitive deal with Immersion Corporation IMMR and existing shareholders and strategic partners regarding new equity and refinancing transactions to boost long-term financial position.

After closing the transactions in June 2024, Barnes & Noble will receive $95 million of new capital through a $50 million equity investment and a $45 million fully backstopped equity rights offering led by immersion.

The deal is projected to infuse net cash proceeds after transaction costs of about $75 million.

Also, the company plans to eliminate about $34 million of debt through equitization of second lien term loans, reflecting the strong support of key strategic partners.

See Also: S&P 500 Due For ‘Classic 10% Correction,’ Wall Street Veteran Warns: Why They Expect Zero Rate Cuts In 2024

Barnes & Noble has received commitments to refinance its existing asset-backed loan facility, which provides access to a $325 million facility maturing in 2028. 

Apart from this, the board of directors approved adopting a short-term stockholder rights plan and declared a dividend distribution of one preferred share purchase right on each outstanding common share.

The rights will be exercisable only if a person or group acquires 10% or more of the company’s common shares and each right will entitle stockholders to buy one one-thousandth of a share of a new series of junior participating preferred stock at an exercise price of $5.00.

Investors can gain exposure to the stock via IShares Microcap ETF IWC and Invesco FTSE RAFI US 1500 Small Mid ETF PRFZ.

BNED Price Action: Barnes & Noble Education shares are down 68.91% at 0.22 cents at publication Tuesday.

Read Next: Goldman Sachs Boasts ‘Near-Perfect’ Q1 Results, 5 Analysts Zero In On ‘Core Strengths’

Photo: Joyseulay via Shutterstock

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: EquitiesNewsEducationOfferingsSmall CapMoversbooksBriefsStories That Matterwhy it's moving
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!