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Tempur-Pedic lifts term B to $870 million, cuts term A to $550 million
By Sara Rosenberg
New York, Nov. 20 - Tempur-Pedic International Inc. upsized its seven-year term loan B to $870 million from $770 million and downsized its five-year term loan A to $550 million from $650 million, according to a market source.
In addition, pricing on the term loan B firmed at Libor plus 400 basis points, the low end of the Libor plus 400 bps to 425 bps talk, the source said.
The 1% Libor floor, original issue discount of 99 and 101 soft call protection for one year on the term loan B were left unchanged.
The $1.77 billion senior secured credit facility (Ba3) also includes a $350 million five-year revolver.
Bank of America Merrill Lynch, Barclays, 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 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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