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BNED secures $95 million in equity capital led by Immersion

Published 06/06/2024, 05:48 AM
BNED
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BASKING RIDGE, N.J. - Barnes & Noble Education, Inc. (NYSE: BNED), an education industry solutions provider, announced today that its shareholders have approved equity and refinancing transactions with Immersion (NASDAQ:IMMR) Corporation (NASDAQ: IMMR). These transactions are expected to significantly strengthen BNED's financial stability and support its strategic investments in innovation.

Expected to close in the second week of June 2024, the deal includes a $50 million equity investment and a $45 million fully backstopped equity rights offering, led by Immersion. This will result in approximately $75 million of net cash proceeds for BNED after transaction costs. Additionally, BNED's existing second lien lenders will convert around $34 million of debt into common stock.

BNED also plans to refinance its asset-backed loan facility, providing access to a $325 million facility maturing in 2028, which is anticipated to improve financial flexibility and reduce annual interest expenses.

Shareholders have approved the appointment of five new directors to BNED's Board of Directors, effective upon closing the transactions. The new members include Eric Singer, Emily S. Hoffman, Sean Madnani, William Martin, and Elias Nader, alongside the re-appointment of Kathryn Eberle Walker and Denise Warren. Concurrently, seven current directors will step down.

These strategic moves come as BNED aims to deleverage its balance sheet and position itself for future growth. The company, which provides services and solutions for academic institutions, aims to support educational success nationwide.

The advisors for BNED in these transactions are Paul Hastings LLP, Houlihan Lokey (NYSE:HLI), Inc., and Berkeley Research Group, LLC. Immersion Corporation, a Nasdaq-listed company primarily engaged in intellectual property licensing, is advised by Pillsbury Winthrop Shaw Pittman LLP and BTIG LLC.

In other recent news, Barnes & Noble Education (BNED) has been the subject of several significant developments. Needham maintained a hold rating on BNED's stock following the release of mixed preliminary financial results for fiscal year 2024. The company's revenue fell short of expectations, but its adjusted EBITDA surpassed forecasts.

BNED has also launched a $45 million equity rights offering, part of a series of transactions aimed at reducing the company's debt and enhancing its financial position. The company anticipates receiving $95 million in new equity capital, including a $50 million investment from Immersion Corporation. 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.

Furthermore, BNED has adopted a stockholder rights plan, which includes a dividend distribution of one preferred share purchase right for each outstanding common stock share. The plan is designed to be activated if an individual or group acquires 10% or more of the company's common stock. Lastly, Craig-Hallum has cut BNED's stock price target to $0.75 from $1.25 while maintaining a hold rating on the company's shares.

InvestingPro Insights

Barnes & Noble Education, Inc. (BNED) has been navigating a challenging financial landscape, as reflected by InvestingPro metrics and tips. With a market capitalization of $16.16 million and a Price / Book ratio of 0.23, BNED is trading at a low valuation multiple, which could indicate that the stock is undervalued relative to its book value. This is particularly relevant as the company seeks to strengthen its financial position through the equity and refinancing transactions with Immersion Corporation.

The stock's price volatility is also worth noting; BNED has experienced significant price fluctuations, with a one-week total return of -43.02% but a strong rebound over the last month, showing a 90.13% return. This high volatility is underscored by two InvestingPro Tips: the stock generally trades with high price volatility, and stock price movements are quite volatile, which potential investors should consider when evaluating the company's short-term performance.

Despite these challenges, the recent shareholder approval for strategic transactions could mark a turning point for BNED. The company's focus on deleveraging and strategic growth, alongside the anticipated boost in financial flexibility from the refinancing deal, may provide the groundwork for future stability and success.

For those interested in a deeper dive into BNED's financial health and stock performance, InvestingPro offers additional tips. There are 13 more InvestingPro Tips available that can provide further insights into BNED's market position and potential investment considerations. To access these tips and make more informed decisions, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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