GE Capital and Lehman Brothers wrapped up a $270 million recapitalization credit for subsidiaries of Tempur World Holdings last week after introducing a pricing grid to the deal. A banker explained that the six-year, $135 million "B" loan is still priced at LIBOR plus 31/2%, as it was when syndication launched. But pricing can step down to LIBOR plus 31/4% if leverage goes below 3.5 times and pricing can go to LIBOR plus 3% if leverage goes below three times, he explained. The mattress and pillow manufacturer presently has debt-to-EBITDA multiples of about four times, he noted.
The credit includes a $20 million, five-year revolver and a $30 million "A" loan. There is also a five-year, $20 million revolver and a $65 million "B" loan for European borrowers (LMW, 8/4). Proceeds from the credit and a concurrent bond deal will be used to pay a $158 million dividend to Tempur's shareholders, to fund a $40 million earn-out to former owners and to refinance existing debt. Private equity firms TA Associates and Friedman, Fleischer & Lowe bought out the Lexington, Ky.-based company last fall. A Lehman official and a GE spokesman declined to comment. Jeffrey Barber, principal at TA Associates, and Christopher Masto, managing director at Friedman, Fleischer & Lowe, did not return calls.