Serta Simmons Bedding, LLC (SSB), a major manufacturer and distributor of mattresses in North America, recently entered into a transaction support agreement with a majority of its First Lien and Second Lien Term Loan Holders to recapitalize the company. The transaction is expected to reduce net debt by approximately $400 million, and further provides for $200 million in new capital to increase its financial strength and support the acceleration of SSB's business transformation plan.
"The agreement with our lenders is further validation of our business and transformation strategy as well as our leadership team," said SSB Chairman and CEO David Swift. "The transaction set out in this agreement will deliver value to our stakeholders and provide the company with increased financial flexibility as we continue to navigate the current macroeconomic challenges, implement our ongoing growth initiatives, and offer customers the leading products they have come to expect from SSB. We are appreciative of our lenders for their support and confidence in our long-term success."
The transaction, once finalized, will amend certain existing loan documents to permit the following:
- New Money Tranche: $200 million of newly funded super-priority "first out" debt ranking ahead of the Existing First Lien Term Loans.
- Exchange Tranche: $875 million of super-priority "second out" debt ranking ahead of the Existing First Lien Term Loans in exchange for certain Existing First Lien Term Loans and Existing Second Lien Term Loans:
- Exchange ratio of $74 of new super-priority "second out" debt in exchange for each $100 of Existing First Lien Term Loans; and
- Exchange ratio of $39 of new super-priority "second out" debt in exchange for each $100 of Existing Second Lien Term Loans.
- An additional basket for super-priority "third out" debt that would rank ahead of the Existing First Lien Term Loans that can be used for future exchanges of Existing First Lien Term Loans and Existing Second Lien Term Loans.
- The use of certain assets for future liquidity enhancing and/or liability management transactions.
The transaction will be subject to certain closing conditions including the implementation of the agreed terms pursuant to definitive documents.
About Serta Simmons Bedding, LLC: Serta Simmons Bedding, LLC is the leading sleep company and the largest manufacturer, marketer and supplier of mattresses in North America. Based in Atlanta, SSB owns and manages the two best-selling bedding brands in the mattress industry: Serta®, which has five other independent licensees, and Beautyrest®. The brands are distributed through national, hospitality, and regional and independent retail channels throughout North America. SSB also owns Simmons® and Tuft & Needle® direct-to-consumer mattress brands. SSB operates 28 plants in the U.S. and Canada.