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Utah's Overstock.com said it is asking federal regulators for permission to be in a position to quickly raise cash by offering as much as $200 million of debt, stocks or other securities.
The well-known online discount retailer has filed what is known as a "shelf registration" with the U.S. Securities and Exchange Commission. If the registration is approved, the company would be able to enter the capital markets to sell its warrants and other securities.
The move comes only a short time after the Salt Lake City company reported in its third-quarter filing with the SEC that by the end of the year it probably will be in violation of a $20 million financing agreement with U.S. Bank, which is one of Overstock.com's largest lenders.
Overstock President Jonathan Johnson insisted Tuesday the filing of the shelf registration is unrelated to its debt issues with U.S. Bank. Nor, Johnson said, does it signal that the company is in need of any additional capital.
"We have had shelf registrations in the past that we have used, and we have had them in the past and not used them," he said. "We have always felt that it is prudent capital management to have a shelf registration in place when the option is available."
A shelf registration is a procedure that allows a company to file a single registration statement with the SEC that covers several issues of the same securities, which can take place at different times. With the registration statement already sitting "on the shelf," a company can go to market with its securities in a short amount of time since most of the preparation already has taken place.
Overstock is in the midst of its fourth quarter, which is typically the company's best-performing period.
However, in its recently completed third quarter ended Sept. 30, Overstock reported a bigger-than-expected loss of $7.8 million, or 33 cents per share, compared with the previous year's third-quarter loss of $3.4 million, or 15 cents per share.
Revenue was $239.7 million, a 2 percent decline from the year-ago period.
And those results contributed to Overstock recording a loss of $16 million, or 69 cents per share, for the first nine months of 2011, compared with a loss of $1 million, or 5 cents per share, in fiscal 2010.
Overstock's report filed with the SEC indicated the company already has had "initial and collegial discussions with U.S. Bank regarding [its] potential non-compliances." And Johnson said if problems arise, the company will try to renegotiate with the bank or possibly enter into a new agreement.
One securities analyst who follows Overstock said he suspects that the company may be able to work out a deal with its primary lender before the end of the quarter.
"Given that U.S. Bank recently loaned Overstock $17 million to pay down [its] remaining debt in [the third quarter of 2011], and given that Overstock keeps $30 million in cash at U.S. Bank as collateral, we would expect the two to work out an agreement, potentially involving a higher level of cash as collateral," Daniel L. Kurnos, an analyst with Benchmark Securites, wrote in a Nov. 15 report.
Overstock shares, which are listed on the Nasdaq system, closed Tuesday at $7.91, down 10 cents for the day. The price is down 14 percent since the end of its third quarter.
Twitter: @OberbeckBiz