Tempur Sealy closes $1.1 billion of new secured credit facilities

By Wendy Van Sickle

Columbus, Ohio, April 7 – Tempur Sealy International, Inc. closed $1.1 billion of new senior secured credit facilities, including a $500 million revolving credit facility, a $500 million term loan facility and a $100 million delayed draw term loan facility, according to a press release.

The company may request to increase the facility by up to $500 million in incremental term loans or additional revolving commitments.

Up to $250 million is available in Canadian dollars, pounds sterling, euros and additional currencies, up to $100 million is available for issuance of letters of credit, and up to $50 million is available for swingline loans.

JPMorgan Chase Bank, NA, Bank of America, NA, Wells Fargo Securities, LLC and Fifth Third Bank acted as lead arrangers and as joint bookrunners; Bank of America, Wells Fargo Bank, NA and Fifth Third as co-syndication agents; and Sumitomo Mitsui Banking Corp., Bank of Nova Scotia and Mizuho Bank, Ltd. as co-documentation agents. JPMorgan is the administrative agent.

Borrowings bear interest at Libor plus 175 basis points, and the applicable margin can range from 125 bps to 225 bps, depending on leverage. The commitment fee is at 30 bps and can range from 20 bps to 40 bps.

The company may draw upon the delayed-draw facility until Oct. 5, 2016.

The facilities mature on April 6, 2021, with the term loans subject to quarterly amortization.

About $27.8 million of proceeds of the revolver and the $500 million term loan were used to refinance Tempur Sealy’s existing credit facilities. Proceeds of the delayed draw term loan will be used to support the repayment of the company’s 8% Sealy notes maturing in July.

The refinancing lowers the company’s borrowing costs, extends its debt maturities and provides increased flexibility for Tempur Sealy to manage its capital structure, chairman and chief executive officer Scott Thompson said in the release.

Tempur Sealy must comply with covenants including a minimum consolidated interest coverage ratio of 3 times, a maximum consolidated total leverage ratio of 5 times and a maximum consolidated secured leverage ratio of 3.5 times.

Tempur Sealy is a Lexington, Ky.-based developer and manufacturer of mattresses, foundations and pillows.

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