S&P: Serta Simmons Bedding LLC's 'B' Corporate Credit Rating Affirmed; Term Loans Assigned 'B' And 'CCC+' Issue-Level Ratings
"The ratings affirmation reflects our belief that Serta Simmons will be able to gradually deleverage following the refinancing and leveraged dividend transaction," said S&P Global Ratings credit analyst Bea Chiem.
We assigned our 'B' issue-level rating and '3' recovery rating to the company's proposed $1.9 billion first-lien term loan due 2023, indicating our expectations for meaningful (50% to 70%) recovery in the event of a payment default at the lower end of the range. We also assigned our 'CCC+' issue-level and '6' recovery ratings to the company's proposed $500 million second-lien term loan due 2024, indicating our expectations for negligible (0% to 10%) recovery in the event of a payment default. The borrowers under the proposed credit facilities are Serta Simmons Bedding LLC, National Bedding Company LLC, and SSB Manufacturing Co.
Proceeds from the new facilities, along with about $140 million in cash from the balance sheet, will be used to refinance the company's outstanding $1.8 billion term loan B and senior notes, pay $670 million in extraordinary dividends to shareholders, and cover breakage costs on the notes and fees and expenses. We will withdraw our ratings on the company's existing term loan B and senior notes following the close of this transaction. All new issue - and recovery ratings assigned are subject to review upon receipt and review of final documentation.
We estimate pro forma adjusted debt following this transaction of approximately $2.6 billion.
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