OREANDA-NEWS. S&P Global Ratings today affirmed its ratings, including its 'B' corporate credit rating, on Atlanta-based bedding company Serta Simmons Bedding LLC. The outlook is stable.

"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.