Tempur-Pedic launches $770 million term B at Libor plus 400-425 bps

By Sara Rosenberg

New York, Nov. 5 - Tempur-Pedic International Inc. launched its $770 million seven-year term loan B on Monday with price talk of Libor plus 400 basis points to 425 bps with a 1% Libor floor and an original issue discount of 99, according to a market source.

The term loan B has 101 soft call protection for one year, the source said.

The $1.77 billion senior secured credit facility (Ba3) also includes a $350 million five-year revolver and a $650 million five-year term loan A.

Commitments are due on Nov. 16.

Bank of America Merrill Lynch, Barclays Capital Inc., J.P. Morgan Securities LLC, Wells Fargo Securities LLC and Fifth Third Securities Inc. are the lead banks on the deal.

Proceeds will be used to help fund the acquisition of Sealy Corp. for $2.20 per share. Including the assumption or repayment of all of Sealy's outstanding convertible and non-convertible debt, the total transaction value is about $1.3 billion.

Other funds for the acquisition will come from $350 million of senior unsecured notes that are backed by a commitment for a senior unsecured bridge loan priced at Libor plus 650 bps, increasing by 50 bps every three months until it hits a cap. The tranche has a 1.25% Libor floor.

Closing is expected in the first half of 2013, subject to customary conditions, including regulatory approvals.

Pro forma leverage will be around 4.0 times.

Tempur-Pedic is a Lexington, Ky.-based manufacturer, marketer and distributor of premium mattresses and pillows. Sealy is a Trinity, N.C.-based bedding manufacturer.

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