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Mattress Firm amends plan for $115 million IPO

Will use stock offering to slash debt more than 40%

HOUSTON — Top 100 store Mattress Firm has amended the prospectus for its initial public stock offering, telling prospective investors it now plans to use the proceeds to slash its debt load by more than 40%.

In a filing with the Securities and Exchange Commission, the Houston-based bedding specialty retailer didn't change the amount it hopes to raise from the IPO - $115 million - but said it would restructure the way the money is used to further reduce debt.

As of May 3, the company had total debt of $406.1 million. That would be reduced to approximately $239 million if the full $115 million is raised from the public stock offering, the company said in the filing.

Under the revised plan, proceeds would pay off a 2009 loan that carries a 16% interest rate. In addition, some $53 million worth of payment-in-kind (PIK) notes and $40.2 million worth of convertible notes would be converted into shares of common stock.

The convertible notes were issued July 19 to pay down a portion of the 2009 loan.

The majority of the convertibles notes and PIK notes are held by investment firms J.W. Childs and Neuberger Berman Group.

J.W. Childs acquired controlling interest in the company in 2006 and would continue to own a majority of the shares after the public offerings.

No date has been announced for the IPO, and the prospectus doesn't indicate what percentage of company equity would be sold to new shareholders.

The amended prospectus also included financial information for the quarter ended May 3, the first quarter of Mattress Firm's fiscal year.

The company said sales were $151.9 million, a 40% increase from the same quarter in 2010, with same-store sales up 19.2%.

Net income for the quarter totaled $1.03 million. In last year's first quarter, the company recorded a net loss of $4.4 million.

In the fiscal year ended Feb. 1, sales were $494.1 million and net income totaled $885,000.

As of May 3, the retailer had 604 company-owned and 97 franchised stores.

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