Bed Bath & Beyond Inc. is looking to mortgage its prized Buybuy Baby brand in its urgent effort to raise financing as sales slump, cash runs low and unpaid vendors withhold shipments. 

Company management is in exclusive talks with Sixth Street Partners for a new line of credit of around US$375 million, which would be backed by assets including the baby brand, according to people with knowledge of the discussions who asked not to be named because they are private. The loan isn’t final and could change. 

An exact valuation for Buybuy Baby is hard to pinpoint, especially as its owner’s fortunes fade, but some analyst estimates have put it at US$1 billion or more. In a letter in March, the company’s top investor Ryan Cohen projected the brand was worth more than the company’s entire market capitalization, which stands at around US$760 million, and said it could even fetch “several billion dollars.”  

The retailer on a conference call earlier this year to discuss first-quarter results said the Buybuy Baby brand had seen net sales increase by over 20 per cent over the prior year, and projected more than US$1.5 billion in sales for the chain by 2023. 

Representatives for Bed Bath & Beyond didn’t respond to requests for comment on the loan or its collateral package. A representative for Sixth Street declined to comment. 

Bed Bath & Beyond is facing a shrinking cash pile and is falling behind on payments to vendors, prompting some suppliers to halt or restrict shipments. While the company became beloved by small-time investors, its equity rally quickly fizzled after Cohen disclosed this month that he was selling his stake.  

Bed Bath & Beyond is mired in a deep sales slump, and its bonds change hands for less than half of face value amid concerns that the retailer’s turnaround effort has stalled. Its chief executive officer stepped down in June after the company reported an adjusted loss and a glut of inventory that will need to be marked down. 

The retailer, based in Union, New Jersey, hired advisory firm Berkeley Research Group to help it focus on cash, inventory and balance sheet optimization. It also made plans to cut at least US$100 million in planned capital expenditures. It ended May with US$108 million of cash, down from US$1.1 billion a year earlier.