Mattress chain exiting Ch. 11
Discounters creditors to receive cash, stock
By Larry Thomas -- Furniture Today, March 9, 2003
Upper Marlboro, Md. — Mattress Discounters is set to emerge from Chapter 11 bankruptcy protection this week after a judge confirmed a reorganization plan that will pay most unsecured creditors about 14 cents for each dollar of their claims.
The retailer, which now operates 107 stores in the eastern United States, said the plan was approved by nearly all its creditors. The company should exit bankruptcy protection around March 14, said Mattress Discounters President Steve Newton.
"It is a real tribute to our employees that over 90% of the creditors voting had sufficient faith in our team, and our company, to vote in favor of the plan," he said.
Under the plan, Mattress Discounters essentially will be owned by its bondholders. All unsecured creditors with claims of more than $10,000 will receive shares of stock in the new company in addition to the partial payment of their claims.
About 11% of the stock will be allocated to a management incentive plan that will be overseen by a new five-person board of directors.
Besides Newton, directors will include Dale Carlsen, president of Sleep Train, a Sacramento, Calif.-based chain of sleep shops, and Michael McCreery, former chief financial officer of Levitz Furniture. Since leaving Levitz in February 2001, McCreery has been senior vice president and CFO of Stage Stores, a 354-store chain that sells apparel, accessories, footwear and cosmetics.
In December, Sleep Train acquired 54 Mattress Discounters stores in the San Francisco, Sacramento and San Diego markets. The deal included the rights to use the Mattress Discounters name on stores in the West.
Also slated to join the board are Andrew Giordano of The Giordano Group, who serves on a number of public and private boards; and Michael Appel, who has been an interim top executive for several retailers and consumer products companies.
None of the new board members are affiliated with Bain Capital, the principal owner of the "old" Mattress Discounters, or Sealy, which had been the retailer's exclusive supplier of branded bedding.
The stores currently carry the Sealy and Simmons brands.
Since filing for Chapter 11 protection in October, Mattress Discounters has sold or closed more than 130 stores. It now has 107 stores in the Boston, Pittsburgh, Baltimore/Washington and Richmond, Va., markets.
Newton said the company plans to open 10 to 12 new stores this year.
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