Mattress Discounters obtains standstill agreements

New York, Aug. 14 - Mattress Discounters Corp. said it has signed standstill agreements with noteholders and bank lenders.

The agreement with bondholders is with an ad hoc committee representing holders of a majority of the Upper Marlboro, Md. mattress retailer's 12 5/8% senior notes due 2007, according to a filing with the Securities and Exchange Commission Tuesday. It runs through Sept. 30 and was entered into on Aug. 2. The agreement terminates should Mattress Discounters default on the bond indenture for any reason other than non-payment of the interest payment that was due July 15.

The agreement with lenders under the company's senior credit facility was entered into on Aug. 12 and runs through Sept. 25, the SEC filing said. Under its terms, the lenders will not exercise any rights or remedies from deferral of the July 15 note interest payment and the company's failure to meet the EBITDA covenant in the credit facility for the period ending June 29, 2002.

Mattress Discounters failed to make the $8.8 million interest payment due July 15 on its 12 5/8% senior notes, saying it would make use of the 30-day grace period.

Negotiations are currently under way with the noteholders committee on restructuring the company's debt.

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