Simmons files prepackaged Chapter 11 to pave way for acquisition

Expects to emerge within 60 days

David Perry -- Furniture Today, November 16, 2009

ATLANTA — Bedding major Simmons today filed a prepackaged Chapter 11 reorganization plan. The filing, which was expected, does not include Simmons' Canadian and Puerto Rican operations.

Under the plan, Simmons and its subsidiaries will continue normal operations during the Chapter 11 process and the company's senior secured bank lenders, trade vendors, suppliers and employees will be paid in full, the company said. Simmons said it expects to emerge from Chapter 11 within 60 days.

The plan provides for the acquisition of Simmons Bedding and its U.S. and foreign subsidiaries by affiliates of Ares Management and Teachers' Private Capital, the owners of Serta. The buyers have said Simmons and Serta will be managed as separate brands.

The plan and related transactions will allow Simmons to reduce its debt from approximately $1 billion to approximately $450 million, allowing the reorganized company to emerge with a stronger balance sheet and increased financial flexibility, Simmons said.

"Today's filings are a necessary step toward the successful conclusion of our financial restructuring," said Simmons President Steve Fendrich. "We do not anticipate any changes in our daily operations as a result of this filing. Our manufacturing plants will operate as usual and our customers should continue to expect the same great service and quality they have received prior to and during this restructuring process."

The filing follows the successful completion of the solicitation process of lenders and note holders. Simmons said that 100% of the claims voted by Simmons' senior lenders, 94.5% of the claims voted by the 7.875% senior subordinated note holders, and 98.8% of the claims voted by the 10% discount note holders voted to accept the prepackaged plan.

The Chapter 11 filing was made in the U.S. Bankruptcy Court for the District of Delaware.

Documents filed with the court show that Simmons' 20 largest unsecured trade creditors are owed more than $12.6 million. They are among the claims that will be paid in full under the company's plan.

The largest trade creditor is components supplier Leggett & Platt, which is owed $3.79 million. Next is foam supplier Foamex, which is owed $1.39 million, followed by South American mattress producer International Mattress Co. at $1.24 million and foam supplier Future Foam Inc. at $1.08 million.

Other major unsecured trade creditors, and the amounts owed, include Davis Wire, $579,454; Hanes Converting, $574,889; Louisville Bedding, $530,988; Vita Nonwovens, $371,408; Global Textile Alliance, $356,909; DuPont, $343,374; Barrettewood USA, $327,534; Polymer Group, $321,813; Bekaert Textiles, $287,795; Ashley Furniture, $279,608; Flexible Foam Products, $277,992; Culp Inc., $247,430; Creative Vinyl/Fabrics, $225,248; FFKR Architects, $190,920; Latex International, $186,054; Mid South Extrusion, $172,263; and King Kamehameh Inc., $165,731.