Mattress maker Spring Air is expected to cease operations within the next few days, according to a report in Furniture Today. peHUB has learned that the move would come after company management failed to reach a buyout agreement with Riverside Company, which had been in talks to acquire Spring Air from current sponsors H.I.G. Capital and American Capital.
It’s unclear exactly what caused the deal breakdown, although one source says the conflicts were related to demands being made by creditors like components maker Leggett & Platt. Also unclear if the failure of a buyout could lead to some sort of bankruptcy filing. This last issue gets even tricker when one looks at an April 22 article from Furniture Today, in which Spring Air CEO Steve Cumbow said:
“We are very healthy. Our overhead is close to what it was in 2007… We are backed by an investment company, American Capital, that has over $200 million in the deal. They see progress. They continue to invest in the company. Our gross margins have gone up in the last five months, despite rising raw material prices… [American Capital] could be a long-term owner.”
Gotta wonder what changed in the past three weeks. How does American Capital go from being a long-term owner, to an attempted seller? Is it due to concerns over American Capital’s own liquidity/default situation? And why did Cumbow not even mention H.I.G. Capital? Those are not rhetorical questions…
No one is picking up at Spring Air’s Tampa headquarters, so I gave a ring to its warranty hotline. A representative there said that the company has not yet ceased operations, but that it is in a “transitionary process with the factories.” Not exactly sure what that means, but the rep didn’t really either (she was just repeating what she was told).
Both H.I.G. Capital and Riverside Company declined comment, while American Capital did not return calls.