BASKING RIDGE, N.J. - Barnes & Noble Education, Inc. (NYSE: BNED), a prominent player in the education sector, has reached an agreement with Immersion (NASDAQ:IMMR) Corporation (NASDAQ: IMMR) and existing stakeholders for a substantial financial restructuring plan. The deal includes a $50 million equity investment and a $45 million equity rights offering, both led by Immersion, expected to close in June 2024.
The arrangement will result in BNED receiving $95 million in new equity capital, with about $75 million in net cash after expenses. The company's second lien lenders, including affiliates of Fanatics, Lids, and VitalSource Technologies, are set to convert approximately $34 million in debt into common stock.
BNED also announced a commitment to refinance its asset-backed loan facility, which will provide a new $325 million facility maturing in June 2028, aimed at enhancing financial flexibility and reducing annual interest costs.
Michael Huseby, CEO of BNED, stated that the transactions are a significant step in the company's strategic review process and are expected to position the company for profitable growth while continuing to invest in innovation.
In the rights offering, BNED plans to issue up to 900 million shares of common stock at $0.05 per share. The rights offering will allow existing stockholders to purchase additional shares, and if any remain unsubscribed, standby purchasers will buy up to $45 million in shares at the same price.
The financial restructuring is contingent on shareholder approval and other closing conditions. BNED will file a registration statement for the rights offering with the U.S. Securities and Exchange Commission by April 18, 2024, and reserves the right to cancel or terminate the offering at any time.
Legal advisor Paul Hastings LLP, financial advisors Houlihan Lokey (NYSE:HLI), Inc., and Berkeley Research Group, LLC are assisting BNED in this process. Pillsbury Winthrop Shaw Pittman LLP and BTIG LLC are advising Immersion Corporation.
This news is based on a press release statement.
InvestingPro Insights
Barnes & Noble Education, Inc. (BNED) is currently trading at a low Price / Book multiple of 0.37, which could suggest that the company's assets are undervalued in the market. This metric is particularly relevant for investors considering the equity infusion and debt conversion outlined in BNED's restructuring plan, which could impact the company's book value per share.
Despite recent challenges, BNED has shown resilience with a solid revenue growth of 3.05% over the last twelve months as of Q1 2023. This growth is a positive sign for stakeholders as the company embarks on its strategic initiatives to position itself for profitability.
An InvestingPro Tip worth noting is that BNED's stock price has experienced a strong return over the last month, with a 15.89% price total return. This could indicate investor confidence in the company's restructuring plan and future prospects. However, it's important to be cautious as BNED's short-term obligations currently exceed its liquid assets, which could pose risks to financial stability.
For investors looking for more in-depth analysis and additional InvestingPro Tips, there are 12 more tips available on BNED's InvestingPro page. These tips could offer further insights into BNED's financial health and future outlook. Interested investors can also take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Finally, BNED's next earnings date is set for June 25, 2024, which will be a critical time for investors to assess the impact of the restructuring plan on the company's financial performance.
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