Barnes & Noble Education, Inc. (NYSE: BNED) (“BNED”
or the “Company”), a leading solutions provider for the education
industry, announced today that its registration statement for its
fully backstopped $45 million equity rights offering (the “Rights
Offering”), was declared effective by the Securities and Exchange
Commission (“SEC”) on May 14, 2024.
The Rights Offering is one of the previously announced proposed
transactions (the “Transactions”) contemplated by the Company’s
definitive agreement with Immersion Corporation (NASDAQ: IMMR)
(“Immersion”), and certain of the Company’s existing shareholders
and strategic partners, that will enable the Company to
substantially deleverage its balance sheet, strategically invest in
innovation and operate from a position of strength. The
Transactions remain subject to shareholder approval and other
closing conditions.
Upon closing of the Transactions, which is currently expected to
occur in June 2024:
BNED will receive gross proceeds of $95 million of new equity
capital through the Rights Offering and a $50 million new equity
investment led by Immersion; the Transactions are expected to
infuse approximately $75 million of net cash proceeds after
transaction costs;
The Company’s existing second lien lenders will convert
approximately $34 million of outstanding principal and any accrued
and unpaid interest into BNED Common Stock; and
The Company has received commitments to refinance its existing
asset backed loan facility, pursuant to an agreement with its first
lien holders, providing the Company with access to a $325 million
facility (the “ABL Facility”) maturing in 2028. The refinanced ABL
Facility will meaningfully enhance BNED’s financial flexibility and
reduce its annual interest expense.
Through the Rights Offering, BNED will issue 900,000,000 shares
of its common stock, par value $0.01 per share (the “Common Stock”)
at a cash subscription price (the “Subscription Price”) of $0.05
per share. In the Rights Offering, BNED will distribute to each
holder of record of its Common Stock on May 14, 2024 (the “Record
Date”) one non-transferable subscription right (each, a
“Subscription Right”) for every share of Common Stock owned by such
holder on the Record Date, and each Subscription Right will entitle
the holder to purchase 17 shares of Common Stock. Each holder that
fully exercises their Subscription Rights will be entitled to
Over-Subscription Rights to subscribe for additional shares of
Common Stock that remain unsubscribed as a result of any
unexercised Subscription Rights, which allows such holder to
subscribe for additional shares of Common Stock up to the number of
shares purchased under such holder’s basic Subscription Right at
$0.05 per share.
If any Subscription Rights remain unexercised upon the
expiration of the Rights Offering after accounting for all
Over-Subscription Rights exercised, the standby purchasers led by
Immersion, Outerbridge Capital Management, LLC and Selz Family 2011
Trust will collectively purchase, at the Subscription Price, up to
$45 million in shares of Common Stock not subscribed for by the
Company’s stockholders.
The Company will not issue fractional shares in the Rights
Offering or cash in lieu of fractional shares of Common Stock. Any
fractional shares of Common Stock that would be created by an
exercise of the Subscription Rights will be rounded to the nearest
whole share.
The Company expects that the net proceeds of the offering will
be used to pay expenses in connection with the Transactions and
reduce the balance under the Company’s ABL Facility.
The Company expects that Computershare Trust Company N.A., the
subscription agent for the Rights Offering, will mail rights
certificates and a copy of the prospectus for the Rights Offering
to holders of record of Common Stock as of the Record Date
beginning on or about May 15, 2024. Holders of shares of Common
Stock held in “street name” through a brokerage account, bank or
other nominee will not receive physical rights certificates and
must instruct their broker, bank or other nominee whether to
exercise Subscription Rights on their behalf.
The subscription period will expire at 5:00 p.m., Eastern Time,
on June 5, 2024. However, the Company may extend the period for
exercising the Subscription Rights. Subscription Rights that are
not exercised by the expiration date of the Rights Offering will
expire and will have no value.
The shares of Common Stock to be issued upon exercise of the
Subscription Rights will be listed for trading on the New York
Stock Exchange (“NYSE”) under the symbol “BNED.” The Subscription
Rights are non-transferable and the Company will not be listing the
Subscription Rights on the NYSE or any other national securities
exchange.
Neither the Company nor its Board of Directors has made or will
make any recommendation to holders regarding the exercise of
Subscription Rights. Holders should make an independent investment
decision about whether or not to exercise their Subscription Rights
based on their own assessment of the Company’s business, the Rights
Offering and the other Transactions.
Questions about the Rights Offering or requests for a copy of
the prospectus related to the Rights Offering may be directed to
the Information Agent, Innisfree M&A Incorporated, at (877)
800-5185. (Banks & Brokers may call collect: (212)
750-5833.
Other Important Information
The issuance and sale of shares of Common Stock pursuant to the
Rights Offering is subject to, among other things, the approval of
our stockholders at a special meeting (the “Special Meeting”) to be
held on June 5, 2024. If the issuance and sale of our Common Stock
pursuant to the Rights Offering is not approved at the Special
Meeting, then the Rights Offering will be cancelled. The Rights
Offering is being made pursuant to the Company’s registration
statement on Form S-1 (File No. 333-278799), which was declared
effective on May 14, 2024. The Company reserves the right to cancel
or terminate the Rights Offering at any time. This press release
does not constitute an offer to sell or the solicitation of an
offer to buy any Subscription Rights or any other securities to be
issued in the Rights Offering or any related transactions, nor
shall there be any offer, solicitation or sale of Subscription
Rights or any other securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful.
About Barnes & Noble Education, Inc.
Barnes & Noble Education, Inc. (NYSE: BNED) is a leading
solutions provider for the education industry, driving
affordability, access and achievement at hundreds of academic
institutions nationwide and ensuring millions of students are
equipped for success in the classroom and beyond. Through its
family of brands, BNED offers campus retail services and academic
solutions, wholesale capabilities and more. BNED is a company
serving all who work to elevate their lives through education,
supporting students, faculty and institutions as they make tomorrow
a better, more inclusive and smarter world. For more information,
visit www.bned.com.
Forward-Looking Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and information relating to us and our business that are
based on the beliefs of our management as well as assumptions made
by and information currently available to our management. When used
in this communication, the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,”
“projections,” and similar expressions, as they relate to us or our
management, identify forward-looking statements. Moreover, we
operate in a very competitive and rapidly changing environment. New
risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
we may make. In light of these risks, uncertainties and
assumptions, the future events and trends discussed in this press
release may not occur and actual results could differ materially
and adversely from those anticipated or implied in the
forward-looking statements. Such statements reflect our current
views with respect to future events, the outcome of which is
subject to certain risks, including, among others: the completion,
timing, size and use of proceeds of the Transactions; the approval
by our stockholders of the Transactions at the Special Meeting; the
amount of our indebtedness and ability to comply with covenants
applicable to current and /or any future debt financing; our
ability to satisfy future capital and liquidity requirements; our
ability to continue as a going concern; our ability to access the
credit and capital markets at the times and in the amounts needed
and on acceptable terms; our ability to maintain adequate liquidity
levels to support ongoing inventory purchases and related vendor
payments in a timely manner; our ability to attract and retain
employees; the pace of equitable access adoption in the marketplace
is slower than anticipated and our ability to successfully convert
the majority of our institutions to our BNC First Day® equitable
and inclusive access course material models or successfully compete
with third parties that provide similar equitable and inclusive
access solutions; the United States Department of Education has
recently proposed regulatory changes that, if adopted as proposed,
could impact equitable and inclusive access models across the
higher education industry; the strategic objectives, successful
integration, anticipated synergies, and/or other expected potential
benefits of various strategic and restructuring initiatives, may
not be fully realized or may take longer than expected; dependency
on strategic service provider relationships, such as with
VitalSource Technologies, Inc. and the Fanatics Retail Group
Fulfillment, LLC, Inc. (“Fanatics”) and Fanatics Lids College, Inc.
D/B/A "Lids" (“Lids”), and the potential for adverse operational
and financial changes to these strategic service provider
relationships, may adversely impact our business; non-renewal of
managed bookstore, physical and/or online store contracts and
higher-than-anticipated store closings; decisions by colleges and
universities to outsource their physical and/or online bookstore
operations or change the operation of their bookstores; general
competitive conditions, including actions our competitors and
content providers may take to grow their businesses; the risk of
changes in price or in formats of course materials by publishers,
which could negatively impact revenues and margin; changes to
purchase or rental terms, payment terms, return policies, the
discount or margin on products or other terms with our suppliers;
product shortages, including decreases in the used textbook
inventory supply associated with the implementation of publishers’
digital offerings and direct to student textbook consignment rental
programs; work stoppages or increases in labor costs; possible
increases in shipping rates or interruptions in shipping services;
a decline in college enrollment or decreased funding available for
students; decreased consumer demand for our products, low growth or
declining sales; the general economic environment and consumer
spending patterns; trends and challenges to our business and in the
locations in which we have stores; risks associated with operation
or performance of MBS Textbook Exchange, LLC’s point-of-sales
systems that are sold to college bookstore customers; technological
changes, including the adoption of artificial intelligence
technologies for educational content; risks associated with
counterfeit and piracy of digital and print materials; risks
associated with the potential loss of control over personal
information; risks associated with the potential misappropriation
of our intellectual property; disruptions to our information
technology systems, infrastructure, data, supplier systems, and
customer ordering and payment systems due to computer malware,
viruses, hacking and phishing attacks, resulting in harm to our
business and results of operations; disruption of or interference
with third party service providers and our own proprietary
technology; risks associated with the impact that public health
crises, epidemics, and pandemics, such as the COVID-19 pandemic,
have on the overall demand for BNED products and services, our
operations, the operations of our suppliers, service providers, and
campus partners, and the effectiveness of our response to these
risks; lingering impacts that public health crises may have on the
ability of our suppliers to manufacture or source products,
particularly from outside of the United States; changes in
applicable domestic and international laws, rules or regulations,
including, without limitation, U.S. tax reform, changes in tax
rates, laws and regulations, as well as related guidance; changes
in and enactment of applicable laws, rules or regulations or
changes in enforcement practices including, without limitation,
with regard to consumer data privacy rights, which may restrict or
prohibit our use of consumer personal information for texts,
emails, interest based online advertising, or similar marketing and
sales activities; adverse results from litigation, governmental
investigations, tax-related proceedings, or audits; changes in
accounting standards; and the other risks and uncertainties
detailed in the section titled “Risk Factors” in Part I - Item 1A
in our Annual Report on Form 10-K for the fiscal year ended April
29, 2023 and in Part II – Item 1A in our Quarterly Reports on Form
10-Q. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results or outcomes may vary materially from those described
as anticipated, believed, estimated, expected, intended or planned.
Subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements in this paragraph. We
undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise after the date of this press
release.
Additional Information Regarding the Special Meeting and Where
to Find It
The Company has filed a proxy statement and proxy card with the
SEC in connection with its solicitation of proxies for the Special
Meeting. THE COMPANY’S STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ
THE DEFINITIVE PROXY STATEMENT (AND ANY AMENDMENTS AND SUPPLEMENTS
THERETO) AND ACCOMPANYING PROXY CARD AS THEY CONTAIN IMPORTANT
INFORMATION. Stockholders may obtain the proxy statement, any
amendments or supplements to the proxy statement and other
documents as and when filed by the Company with the SEC without
charge from the SEC’s website at www.sec.gov.
Certain Information Regarding Participants
The Company, its directors and certain of its executive officers
and employees may be deemed participants in connection with the
solicitation of proxies from the Company’s stockholders in
connection with the matters to be considered at the Special
Meeting. Information regarding the direct and indirect interests,
by security holdings or otherwise, of the Company’s directors and
executive officers in the Company is included in the Company’s
definitive Proxy Statement on Schedule 14A for the Special Meeting
under the heading “Security Ownership of Certain Beneficial Owners
and Management” filed with the SEC on May 15, 2024.
Source: Barnes & Noble Education
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version on businesswire.com: https://www.businesswire.com/news/home/20240514682337/en/
BNED Contact – Media and Investors Hunter Blankenbaker Vice
President – Corporate Communications and Investor Relations (908)
991-2776 hblankenbaker@bned.com
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