Bed Bath & Beyond surged 120%, then plunged as the embattled retailer secured a $1 billion fundraising deal to avoid bankruptcy

• Bed Bath & Beyond surged as much as 120% Monday and then plunged after it announced a $1 billion funding deal.
• The shares fell almost 37% in after-hours trading after the company detailed its capital-raising plan.

Bed Bath & Beyond surged as much as 120% on Monday before plunging back as the home furnishings retailer secured investor commitments to raise over $1 billion in capital to avoid bankruptcy.

After ending the session 92% higher on the day, the shares dropped 37% in after hours to $3.70 after the company announced the funding deal.

The firm, which is teetering on the edge of bankruptcy, plans to issue convertible preferred securities and warrants, according to a statement. It said it would immediately raise $225 million through the sale in a deal that would eventually rack up more than $1 billion, per the Wall Street Journal.

A convertible preferred stock is a type of equity security issued by companies, giving the investor the right to convert its preferred stock into common stock after a defined date.

Bed Bath & Beyond's troubles have been growing in the past year. Earlier this year, the New Jersey-based company said it may file for Chapter 11 bankruptcy protection after laying off 20% of its workforce last year.

The home goods retailer's finances deteriorated as it struggled with getting enough products on its shelves, attracting fewer customers to its stores and website. It's also steeped in debt that the retailer said it lacked funds to pay off. Just this month, it missed interest payments on roughly $1 billion worth of bonds.

Bed Bath & Beyond did not immediately respond to Insider's request for comment.