Bank of America is in the market with a fully underwritten $235 million credit backing National Bedding Company's acquisition of bankrupt Sleepmaster. The mattress company deal includes a five-and-a-half-year, $100 million senior secured "B" piece priced in the LIBOR plus 33/ 4% area, said a banker. A five-year pro rata portion comprising a $60 million senior secured revolver and a $75 million "A" loan is also included in the debt package. The banker stated that commitments were coming in for the B+/B1 rated facility, but he could not comment on exact levels by press time (see story, page 7). A B of A official declined to comment.
Burt Kaplan, National Bedding's co-chairman, thought the deal was well timed to achieve positive market reception. The facilities have a downstream guarantee from National Bedding Holdings, secured by its 85% ownership in National Bedding, according to Moody's Investors Service. Sleepmaster Holdings will also pledge the remaining 15% of National Bedding's stock that it will own.
National Bedding decided to acquire Sleepmaster, an entity about 1.5 times larger than itself, after a series of other large mattress licensee acquisitions, explained James Polark, National Bedding's cfo. Kaplan noted that the Sleepmaster integration should be successful because of the management's previous acquisition experience. The size of the Sleepmaster deal is about $202 million. Kaplan added that the company would be paying $110 million of Sleepmaster's secured debt in the transaction. The combined entity would make up 79% of the domestic licenses and voting rights for the Serta mattress brand. Polark and Kaplan said the entire transaction is scheduled to close by next week. Kaplan mentioned that La Salle Bank was involved in leading National Bedding's previous bank deals and the lender would continue to participate in the new credit.