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S&P rates Sleepy's loan B-
Standard & Poor's said it assigned a preliminary B- corporate credit rating to HMK Mattress Holdings LLC (Sleepy's).
The agency also said it assigned a preliminary B- rating with a preliminary 3 recovery rating to the proposed $170 million term loan issued by HMK Mattress Intermediate LLC.
The 3 recovery rating indicates 50% to 70% expected recovery in a default.
The outlook is stable.
The proceeds from the term loan, preferred stock issuance and cash on hand will be used to fund a $278 million dividend to existing shareholders and refinance about $35 million in mortgage notes and other existing debt, S&P said.
The ratings reflect an expectation that moderate operational improvement and consistent cash flow generation will offset the relatively large debt load that the company is acquiring in the transaction, the agency said.
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