Simmons, Serta debt will top $1B even after trim

The soon-to-be parent company of bedding majors Simmons and Serta will have more than $1 billion in long-term debt once Simmons emerges from bankruptcy protection, according to documents filed in U.S. Bankruptcy Court here.

Simmons currently has about $1 billion of debt of its own, but more than half will be wiped out under the proposed bankruptcy reorganization.

The documents say Simmons and Serta will be operated as separate entities. However, several key financial measures are combined because the new parent, an affiliate of Serta owners Ares Capital and the Ontario Teachers’ Pension Fund, is projecting significant cost savings from the new ownership structure.

The documents were filed as part of Simmons’ prepackaged Chapter 11 reorganization in anticipation of Simmons being acquired by Serta’s owners.

A footnote to the statement projects Simmons’ sales in 2010 at $950 million to $960 million. A separate document projects Serta Holding’s 2010 sales at $797 million. That would put the combined companies’ sales at $1.75 billion to $1.76 billion next year — an increase of 5.8% to 6.4% from 2009.

As a standalone company, Simmons sales are projected to be $903.1 million for this year, down 12.2% from 2008.

Serta Holdings’ projected sales for this year are $742.3 million, down 8.6% from 2008. Serta Holdings generates more than 80% of the sales of the Serta brand nationally.

The financial projections, which assume the acquisition will be closed on March 15, show the two companies with approximately $1.048 billion in long-term debt on that date. Of that total, Serta’s debt is projected at $599.6 million and Simmons is forecast at $448 million.

The court documents show Serta had $624.4 million in debt as of Sept. 30, and project that figure will fall to $613.5 million by the end of this year.

According to the projections, debt for the new parent company would fall to $1.005 billion by the end of 2010. From there, it would fall steadily to $815.8 million by the end of 2013.

During that same period, the parent company’s cash position would rise steadily from $182 million at the end of 2010 to $443.4 million by the end of 2013, the projections show.


Tags: , , , , , , , , , , , , ,

Comments are closed.