Restructuring in process at Simmons
By David Perry -- Furniture Today, March 16, 2009
ATLANTA — Work on a financial restructuring at Simmons is proceeding in an orderly fashion and negotiations with key parties are going well, Simmons officials said.
“We are heading down a restructuring path,” said Steve Fendrich, president of the bedding major. “It can go a number of ways. We will restructure our balance sheet and we are negotiating with all parties.”
Fendrich said it is not the company's intention to pursue the restructuring with a Chapter 11 filing, an issue that was raised earlier this month in a Wall Street Journal story on the woes of private equity firms who have entered the bedding marketplace.
That story said of Simmons: “The THL Partners-owned company is seeking another private-equity fund or investor to put in new debt or equity either inside or outside bankruptcy.…” It attributed that information to “several people familiar with the matter” but did not name them.
Fendrich did not challenge the accuracy of those statements. But he did say that the Journal story erred in stating that Simmons recently “hired the law firm Weil Gotshal & Manges LLP as bankruptcy counsel.” Simmons hired the firm in 2003 and is working with the law firm's “restructuring group,” he said.
He also disputed the Journal's report that Simmons “is offering investors a chance to be a 'stalking horse' that funds a plan of reorganization should Simmons file.”
“The phrase 'stalking horse' has not been used inside our company,” Fendrich said. “We are pursuing new equity and debt financing. We are not pursuing a 'stalking horse.'”
He expressed concern that the Journal story could “scare our customers or suppliers.” He said the company's cash position remains strong and “we have no plans to close any plants or undertake any further reduction in our workforce. We are done with our operational restructuring.”
Fendrich also said that Simmons “is not the typical company going through a restructuring. We continue to outperform the market, and have for 12 consecutive quarters.”
Simmons will emerge from the financial restructuring with a new owner, he predicted. But, he said, the ownership change won't affect Simmons' commitment to providing top-notch service to its dealers.
“Nothing we are going through will affect our ability to continue to supply our customers as we have in the past,” he said. “That belief extends to every debt and equity partner we have talked to. Everyone is aligned on that.”
Added Tim Oakhill, executive vice president of marketing: “We have a lot of great things going on for us.”
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