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14 May 2009
New York, May 14, 2009 -- Moody's Investors Service assigned a Ba3 rating to Sealy Corporation's
proposed senior secured notes. At the same time, Sealy's
B2 corporate family rating and probability-of-default rating
was affirmed as was the Caa1 rating on the senior subordinated notes and
SGL 3 liquidity rating. The ratings outlook remains negative.
Moody's expects that the proceeds from the $350 million secured
notes together with proceeds from a $177 million convertible 3rd
lien note offering will be used to repay amounts outstanding under the
existing senior secured term loan and revolving credit facility and improve
its existing cash balances. The ratings on the term loan and revolver
will be withdrawn when the amounts are repaid.
The Ba3 rating on the senior secured notes reflects a B2 probability-of-default
rating and an LGD 2. The Ba3 senior secured note rating also reflects
its junior position to the new proposed $100 million ABL revolving
credit facility, its seniority to subordinated notes and its upstream
guarantees from operating subsidiaries.
If the transaction closes under its current terms, the company's
liquidity profile will significantly improve and its liquidity rating
may be upgraded accordingly. Liquidity highlights of the proposed
refinancing are the lack of any maturities over the next six years and
a new $100 million ABL revolving credit facility, which lacks
financial covenants provided the borrowing capacity is at least $15
Sealy's B2 corporate family rating reflects the continuing decrease
in consumer spending over the last year, which has resulted in a
significant decrease in revenue, operating income and cash flow
and has put pressure on credit metrics. While the severity of the
decline may moderate later in the year, operating performance and
credit metrics are likely to remain weak in the near term. Supporting
Sealy's B2 rating is its strong market position and brand names
and its history of generating good operating cash flow.
The ratings outlook remains negative due to the combination of higher
financial leverage from this transaction and the ongoing uncertainty in
discretionary consumer spending.
$350 million senior secured notes due 2016 at Ba3 (LGD 2,
Ratings affirmed/assessments revised:
Corporate family rating at B2;
Probability of default rating at B2;
$300 million senior secured term loan due August 2011 at Ba3 (LGD
$140 million senior secured term loan due August 2012 at Ba3 (LGD
$125 million senior secured revolving credit facility due January
2010 at Ba3 (LGD 2, 28%);
$390 million senior subordinated notes due 2014 at Caa1 (LGD 5
87% from LGD 5 83%);
Speculative grade liquidity rating at SGL 3;
Moody's also assigned the following ratings pursuant to the company's
April 2, 2009 registration filing:
Senior secured shelf: (P) Ba3
Sealy Mattress Company, a wholly-owned subsidiary of Sealy
Corporation, is headquartered in Trinity, North Carolina.
Net sales for the twelve months ended February 2009 approximated $1.4
The last rating action was on January 26, 2009, where Moody's
downgraded all ratings one notch and kept the ratings outlook negative.
The principal methodology used in rating Sealy was the Global Consumer
Durables Goods methodology which can be found at www.moodys.com
in the Credit Policy & Methodologies directory, in the Ratings
Methodologies subdirectory. Other methodologies and factors that
may have been considered in the rating process of rating Sealy can also
be found in the Credit Policy & Methodologies directory.
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
Moody's rates Sealy's secured notes Ba3
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
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