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Moody's rates Mattress loans Ba3
Moody's Investors Service said it assigned B2 corporate family and probability-of-default ratings to Mattress Holdings Corp. and Ba3 ratings with loss-given-default assessments of LGD2 (28%) to the company's $25 million senior secured revolving credit facility and $185 million senior secured term loan facility.
The outlook is stable.
The ratings are being assigned in connection with the acquisition of Mattress Holding by J.W. Childs Associates for approximately $450 million, including the repayment of existing debt. The acquisition will be financed with the proceeds of the proposed $185 million term loan, an unrated privately placed subordinated notes offering and an equity contribution by J.W. Childs and management.
The agency said the B2 corporate family rating of Mattress Holdings reflects post-transaction credit metrics that will be weak, particularly very high leverage and low cash flow coverage; by the company's very small scale with top-line revenues for the last-12-month period ended Oct. 31 of $362 million; and by its shareholder-friendly financial policies.
Offsetting these high-yield characteristics are several investment-grade characteristics including the company's low seasonality, the stability of the U.S. retail mattress market, the company's credible market position in the very defined specialty retail sleep channel and its strong comparable-store sales growth over the past two years, Moody's said.
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