Its massive complexes left empty by the coronavirus shutdown, Dave & Buster’s has opted to sell stock to keep itself above water.
The Dallas-based food and games chain on Tuesday said it has a deal with Jefferies to sell up to $75 million in shares in an “at-the-market offering” program.
That program is designed to raise cash to help the company weather its coronavirus shutdown.
The company agreed in a deal with lenders to make “commercially reasonable efforts” to begin the stock sale within 60 days, according to a federal securities filing Tuesday.
Dave & Buster’s stock declined 12% on news of the sale. Its stock price has been volatile of late but has lost more than 70% of its value since February, largely on concerns related to the shutdown.
The shutdown, including “the closure of our stores and the resulting impact of the closures on our revenues, profitability and ability to meet debt covenants, could continue to have a significant effect on the market price of our common stock,” the company said in a filing.
Dave & Buster’s has faced major questions about its ability to make it through the shutdown, given its overall debt load and heavy reliance on dine-in customers.
The company earlier this month furloughed more than 15,000 employees and closed all of its 137 locations. Dave & Buster’s has $648 million in debt and about 15 weeks’ worth of operating cash.
“We have been thoughtfully and quickly implementing a comprehensive plan with one simple goal,” CEO Brian Jenkins told analysts earlier this month, according to a transcript on financial services site Sentieo. “Reopen our stores as soon and safely as we can so we can welcome back our furloughed team members, turn our games back on, and bring fun into the communities we serve, some that we believe will be very important as our company emerges from this pandemic.”
Lenders have given the company a waiver of many of the financial requirements in its loan agreement, and some landlords have given the company rent concessions.
Dave & Buster’s also revealed earlier this month that it was in discussions with various parties to improve its liquidity to get it through the shutdown. Media reports indicated the company was in talks with some private-equity groups. The stock sale suggests the company is taking a different route.
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