National Bedding Company increased the "B" tranche of its new $235 million credit after the Bank of America-led credit met with strong institutional demand. The "B" tranche was increased by $100 million and is now set at $132 million. The credit's five-year "A" piece was decreased from $75 million to $43 million, said Jim Polark, v.p. and cfo. A five-year revolver remained at $60 million. The credit backs National Bedding's recent acquisition of the bankrupt Serta brand mattress manufacturer Sleepmaster. Polark explained that $117 million went toward the payment of Sleepmaster's debt, while $35 million went to Sleepmaster's creditors committee. The facility also refinanced the company's debt, including about $55 million on an existing $85 million term loan and revolver facility, Polark stated. Revolver usage on the new line will include $31.9 million of standby letters of credit issued to support industrial revenue bonds (LMW, 2/10).
The five-and-a-half-year "B" loan is priced at LIBOR plus 33/4%, while the pro rata carries a rate of 3% over LIBOR. Pricing is based on a grid tied to leverage, Polark noted. The senior secured deal has a downstream guarantee from National Bedding Holdings, secured by its 85% ownership in National Bedding, while Sleepmaster Holdings will pledge the remaining 15% of National Bedding's stock that it now owns. "[B of A has] been our bank for more than seven years or so and they've done a great job," he said of the long-time lead bank. LaSalle Bank was also a player on National Bedding's past deals and continued as a participant in the new B+/B1-rated credit, Polark affirmed.