(Bloomberg) — Serta Simmons Bedding is preparing to seek bankruptcy protection as soon as January, according to people with knowledge of the situation.
The closely held mattress manufacturer has been in confidential talks with its creditors over a restructuring plan, which may involve giving control to certain first-lien lenders, said the people, who asked not to be identified because the matter is private.
Talks are ongoing and plans could change, the people added. It isn’t yet clear if the company needs financing to fund its operations through Chapter 11, they said.
A spokesperson for majority private equity owner Advent International declined to comment. Serta didn’t respond to request for comment.
Serta’s entire debt load of more than $2 billion matures next year. Its approximately $843 million first-lien term loan due November 2023 is quoted at around 9 cents on the dollar, according to data compiled by Bloomberg.
Given the sizable debt wall and deteriorating performance amid an inflationary environment, Serta will likely see a default, bankruptcy filing or debt restructuring in the coming months, S&P Global Ratings wrote in a note in August. Lower consumer confidence and slowdown in the housing market will likely hurt demand for bedding related products, the credit grader said.
Facing financial distress in 2020, Serta cut an out-of-court restructuring deal with creditors that added “super-priority” debt and pushed down some lenders back in line for repayment. A group of funds including Angelo Gordon & Co. and Apollo Global Management recently sued Serta and rival lenders, seeking to invalidate the transaction.
The company’s debt load stems from Advent’s roughly $3 billion leveraged buyout of AOT Bedding Super Holdings LLC in 2012.
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