(Bloomberg) -- The Container Store Group, Inc. struck a deal for $40 million in preferred equity from Beyond, Inc. as part of a new strategic partnership, according to a press statement on Tuesday.
The Container Store will issue shares of a new series of preferred stock for the deal, the company said in a statement. The preferred stock would convert to common stock at a price of $17.25, leading Beyond to own approximately 40% of the firm’s equity.
The Container Store, a nationwide chain known for closet organizers, storage shelves and container bins, has been struggling with declining revenue and a pile of debt maturing in 2025 and 2026.
In May, the company said it hired Latham & Watkins and JPMorgan Chase & Co. to consider strategic alternatives, which typically involves soliciting takeover offers or mulling other steps to deal with financial distress.
Beyond is the owner of Bed Bath & Beyond, Overstock, Zulily and other online retail brands. The partnership will open co-branded spaces, introduce a loyalty program and make Container Store products available on Beyond’s e-commerce sites, among other initiatives, according to the statement.
The transaction requires an amendment or refinancing of The Container Store’s credit facilities, the company said in the statement. The retailer did amend an existing term loan with JPMorgan and other lenders to waive certain covenants and added a stipulation that will allow it “to enter into a qualified financing transaction” by Nov. 15, according to a regulatory filing.
The company recently adopted a poison-pill provision, a method used to ward off unwanted takeovers by making them prohibitively expensive, after it saw a “rapid and significant accumulation” of its shares by a single stockholder.
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