Dave & Buster’s Entertainment Inc. (NASDAQ: PLAY) shares plummeted to start the week, after the firm announced a proposed public offering of stock. Note that there appears to be only one buyer for this offering.
Under the terms of the offering, Jefferies has agreed to purchase $100 million of common stock, to be reoffered by Jefferies at variable prices. Additionally, Jefferies has an option to purchase up to an aggregate of an additional $15 million of shares.
Keep in mind that, as of Monday, Dave & Buster’s has a total market cap of roughly $341 million.
Dave & Buster’s intends to use the net proceeds from this offering primarily to strengthen its balance sheet, principally as necessitated by the effects of the COVID-19 outbreak on its business, which could include use for general corporate purposes or repayment of outstanding debt.
Considering that Dave & Buster’s is an almost entirely consumer-facing business, it has been one of the hardest hit by the coronavirus pandemic. In fact, shares are down about 67% year to date, excluding Monday’s move.
While investors sent shares lower in response, the move is a prudent one by the business to secure more liquidity.
As a return to normalcy (or at least a new normal) is starting to take shape, this stock has picked up from its lows in March. Shares are up about 25% in the past month alone. However, much uncertainty remains going forward.
Dave & Buster’s stock traded down about 16% to $11.15 on Monday, in a 52-week range of $4.61 to $59.60. The consensus price target is $17.05.