NEW YORK (Reuters) – Simmons Bedding Co said on Tuesday it had won bankruptcy court approval to be taken over by affiliates of Ares Management LLC and Teachers’ Private Capital and emerge from bankruptcy by Jan. 20.
The Atlanta-based mattress maker said that the U.S. Bankruptcy Court for the District of Delaware had approved its pre-packaged restructuring plan, which helps the company cut debt by more than half, to about $450 million.
In a pre-packaged bankruptcy, a company reaches agreements with creditors on reorganization and repayment before it files a bankruptcy petition.
Asset manager Ares and Teachers’ Private Capital, the private investment department of the Ontario Teachers’ Pension Plan, which already own rival mattress maker Serta, will take control of Simmons in a transaction valued at about $760 million.
The deal includes the domestic and international subsidiaries of Simmons, as well as its parent Bedding Holdco Inc.
“The company’s historical performance is excellent when measured against our core investment criteria,” Erol Uzumeri, senior vice-president of Teachers’ Private Capital, said in a statement. “With its new capital structure, we are confident this investment will produce significant returns for us and all of its stakeholders — both now and over time.”
The combination of Serta and Simmons could dethrone the current world leader Sealy Corp (ZZ.N), as the two brands would have a combined market share larger than Sealy, according to market research firm IBISWorld Inc, in November.
Affiliates of private equity firm Kohlberg Kravis Roberts & Co [KKR.UL] held 50.9 percent of Sealy as of Aug. 30.
The plan provides for all trade vendors, suppliers employees, and senior secured lenders to be paid in full.
The maker of Beautyrest and ComforPedic mattresses filed for Chapter 11 bankruptcy protection in November
Miller Buckfire & Co and law firm Weil, Gotshal & Manges LLP are advising Simmons. Goldman Sachs & Co (GS.N) and law firm Sullivan & Cromwell LLP are advising the buyers. (Reporting by Chelsea Emery; editing by Gunna Dickson)