Simmons, the maker of Beautyrest mattresses and other bedding products, said Friday that it plans to file for Chapter 11 bankruptcy protection and implement a restructuring plan that will help significantly lower its debt.
The plan is expected to reduce total debt from about $1 billion to approximately $450 million and not affect the business operations from running normally.
Privately held Simmons said the restructuring includes the acquisition of Simmons Bedding, its subsidiaries and parent company Bedding Holdco by affiliates of private equity fund Ares Management 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 restucturing, with the process likely to be closed within 30 days of the solicitation's launch. Simmons plans to file for Ch. 11 bankrupcty protection after the solicitation period. Banruptcy filing will not include Simmons Bedding subsidiaries in Canada and Puerto Rico, but those units will be inlcuded 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.