Simmons plans to file for bankruptcy protection

September 25, 2009

(AP) -- Simmons Co., the maker of Beautyrest mattresses, said Friday that it plans to file for Chapter 11 bankruptcy protection in a move that will put new owners in charge of the bedding unit and significantly lower the company's debt.

Sales have slumped for mattress makers as consumers pull back on their spending amid the recession, especially limiting their purchases of big ticket items like mattresses.

The plan, which will not affect business operations, is expected to reduce total debt from about $1 billion to approximately $450 million.

Privately held Simmons said the restructuring includes the acquisition of Simmons Bedding Co., its subsidiaries and parent company Bedding Holdco Inc. by affiliates of private equity fund Ares Management LLC and Teachers' Private Capital, the private investment branch of the Ontario Teachers' Pension Plan.

The approximately $760 million deal includes equity from Ares and TPC and some of Simmons' current lenders and debt commitments from certain Simmons' lenders.

A majority of Simmons and Simmons Bedding noteholders, including holders of Simmons 10 percent discount notes and Simmons Bedding $200 million senior subordinated notes, have decided to support the plan.

Simmons Bedding noteholders will be entitled to a pro rate share of $190 million in cash, while Simmons noteholders will be entitled to receive a share of $15 million in cash.

Simmons Bedding vendors, suppliers, workers and senior bank lenders will be paid in full, the company said.

Noteholders and senior bank lenders will be solicited to vote on the restructuring, with the process likely to close within 30 days of the solicitation's launch. Simmons plans to file for Ch. 11 protection after the solicitation period. The will not include Simmons Bedding subsidiaries in Canada and Puerto Rico, but those units will be included in the acquisition.

Simmons Bedding has also arranged a $35 million debtor-in-possession revolving credit facility related to the restructuring plan. The plan must receive bankruptcy court approval.

The move gives the company a chance to get out from its debt and restructure to recover from falling sales and shrinking profit. Simmons' sales fell nearly 19 percent in the three-month period ending in June to $218 million, according to filings with the Securities and Exchange Commission. It posted a net loss of $5.8 million, compared to profit of $1.1 million in the same period last year.

For the first half of the year, sales are down 19 percent and Simmons lost nearly $9 million,

Rival Tempur-Pedic International Inc., said in July its profit dropped 17 percent as sales fell 22 percent in its second quarter.

But as the economy starts to show signs of improvement, mattress sales also appear to be ticking upward. Last week SunTrust Robinson Humphrey analyst Keith Hughes told clients in a note there were signs of "incremental improvement" in mattress sales over the Labor Day weekend, though they were still below prior-year levels.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: Study: New radar system cut tornado deaths

Related Stories

Study: New radar system cut tornado deaths

June 29, 2005

A study finds that the number of tornado casualties in the United States has fallen by half since a network of Doppler weather radar was installed 10 years ago.

Amazon 2Q profit falls with Toys R Us settlement

July 23, 2009

(AP) -- Amazon.com Inc. said Thursday that its second-quarter earnings fell while sales rose, due to a $51 million payment to settle a long-standing dispute with former partner Toys R Us. The profit still beat Wall Street ...

Sun absorbs $147M loss as Oracle deal looms

August 29, 2009

(AP) -- Sun Microsystems Inc. recorded a $147 million loss while sales eroded 31 percent in the April-June period, likely the server and software maker's last full quarter as an independent company.

Recommended for you

How to curb emissions? Put a price on carbon

September 3, 2015

Literally putting a price on carbon pollution and other greenhouse gasses is the best approach for nurturing the rapid growth of renewable energy and reducing emissions.

Customizing 3-D printing

September 3, 2015

The technology behind 3-D printing is growing more and more common, but the ability to create designs for it is not. Any but the simplest designs require expertise with computer-aided design (CAD) applications, and even for ...

Team develops targeted drug delivery to lung

September 2, 2015

Researchers from Columbia Engineering and Columbia University Medical Center (CUMC) have developed a new method that can target delivery of very small volumes of drugs into the lung. Their approach, in which micro-liters ...

Magnetic fields provide a new way to communicate wirelessly

September 1, 2015

Electrical engineers at the University of California, San Diego demonstrated a new wireless communication technique that works by sending magnetic signals through the human body. The new technology could offer a lower power ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.