Barnes & Noble Education Shareholders Approve Milestone Equity and Refinancing Transactions to Significantly Strengthen Balance Sheet and Advance Industry Leading Services for Institutions and Students
Barnes & Noble Education (BNED) announced shareholder approval for significant equity and refinancing transactions led by Immersion These transactions include a $50 million equity investment and a $45 million equity rights offering, yielding $95 million in new equity capital.
Additionally, $34 million in second lien debt will be converted to equity. BNED will also refinance its asset-backed loan facility, accessing a $325 million facility maturing in 2028. These measures aim to enhance BNED's financial position, reduce interest expenses, and support strategic innovation investments.
The shareholder meeting also approved the appointment of five new directors to the board, along with two reappointments, effective with the transaction's closure.
- Shareholder approval of $95 million in new equity capital.
- Conversion of $34 million in second lien debt to equity.
- Refinancing of asset-backed loan facility to access $325 million, maturing in 2028.
- Expected reduction in annual interest expenses.
- Strengthened financial position and enhanced financial flexibility.
- Support for strategic investment in innovation.
- Transaction costs will reduce the net cash proceeds to approximately $75 million.
- Significant changes in the board of directors could lead to strategic instability.
Insights
The approved equity and refinancing transactions are a significant development for Barnes & Noble Education (BNED). Receiving $95 million in new equity capital through a combination of a $50 million private investment and a $45 million equity rights offering will provide a substantial boost to the company's financial position. This influx of funds, which translates to approximately $75 million in net cash proceeds after transaction costs, is expected to alleviate financial pressure and support the company’s strategic initiatives.
A important aspect of this transaction is the conversion of approximately
For retail investors, this transaction can be perceived positively as it addresses the company's leverage issues and provides the necessary capital to invest in growth initiatives. However, it is essential to monitor how effectively BNED utilizes these funds and whether the anticipated benefits materialize in improved financial performance and shareholder value.
The strategic rationale behind these transactions is to strengthen BNED’s competitive position in the education sector. The equity injection and debt refinancing are aimed at deleveraging the company and providing it with the financial resources needed to invest in new services and innovations, which could drive long-term growth. This move could position BNED more favorably against competitors in a rapidly evolving market where digital and technological advancements are critical.
From a market perspective, the backing of Immersion Corporation and other second lien lenders indicates a vote of confidence in BNED’s strategic direction. However, investors should be cautious of potential dilution resulting from the equity rights offering and debt conversion. The long-term success of these transactions will heavily depend on how effectively BNED can leverage these resources to enhance its service offerings and market position.
The addition of new members to BNED’s Board of Directors brings fresh perspectives and expertise, which can be beneficial for the company’s strategic oversight and decision-making processes. Notably, the inclusion of executives from Immersion Corporation and other firms could facilitate closer alignment with strategic partners and stakeholders. This change in the board’s composition could enhance governance and potentially lead to more effective execution of the company’s strategic plans.
For investors, the new board composition is worth monitoring to see how these changes will influence the company’s strategic direction and corporate governance practices. Effective governance can play a important role in ensuring that the new capital is deployed efficiently and in the best interest of shareholders.
BNED to Receive
Converts Approximately
Shareholders Approve Seven Directors to Serve on Board of Directors
Upon close, which is expected in the second week of June 2024:
-
BNED will receive gross proceeds of
$95 million $50 million $45 million $75 million -
The Company’s existing second lien lenders, affiliates of Fanatics, Lids, and VitalSource Technologies (“VitalSource”) (collectively, the “Second Lien Lenders”), will convert approximately
$34 million -
The Company will 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
Changes to Board of Directors
In addition to the approval of the Transactions, shareholders approved the appointment of five new Directors to the Company’s Board of Directors, and re-appointment of two existing Directors, Kathryn Eberle Walker and Denise Warren. The appointments to the Board of Directors will be effective at the closing of the Transactions:
- Eric Singer, President, CEO and Chairman of the Board of Immersion Corporation
- Emily S. Hoffman, Chief Marketing Officer of SmartPak
- Sean Madnani, Chief Executive Officer of Twist Capital
- William Martin, Chief Strategy Officer of Immersion Corporation
- Elias Nader, Chief Financial Officer of QuickLogic Corporation
- Kathryn Eberle Walker, Chief Executive Officer, Presence Learning Inc., Member of BNED Board of Directors since 2022
- Denise Warren, Founder and Chief Executive Officer of Netlyst, LLC, Member of BNED Board of Directors since 2022
For more information on the newly appointed Board of Directors, including full biographies, please refer to the Company’s proxy statement.
Mario Dell’Aera Jr., David Golden, Michael Huseby, Steven Panagos, Vice Admiral John Ryan, Rory Wallace, and Raphael Wallander will step down from the Company’s Board of Directors, effective at the closing of the Transactions.
Advisors
Paul Hastings LLP is serving as legal advisor and Houlihan Lokey, Inc. and Berkeley Research Group, LLC are serving as financial advisors to BNED. Pillsbury Winthrop Shaw Pittman LLP is serving as legal advisor and BTIG LLC is serving as financial advisor to Immersion Corporation.
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.
About Immersion Corporation
Immersion, Inc. (NASDAQ: IMMR) is a Nasdaq-listed company in the Russell 2000 that is primarily engaged in the business of intellectual property licensing. Immersion is well capitalized with over
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 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 and inclusive 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 initiative, 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 (“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 K-12 schools, 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20240605883293/en/
BNED – Media and Investors
Hunter Blankenbaker
Vice President – Corporate Communications and Investor Relations
(908) 991-2776
hblankenbaker@bned.com
Source: Barnes & Noble Education
FAQ
What is the value of the new equity capital BNED will receive?
How much second lien debt is being converted to equity?
What is the maturity date of BNED's refinanced asset-backed loan facility?
How much is BNED's asset-backed loan facility worth?
When is the expected closing date for these transactions?
Who led the new equity investment for BNED?
How much net cash proceeds will BNED receive after transaction costs?
How many new directors were approved for BNED's board?
