Mattress Firm expects to use add-on term loan for Sleepy’s purchase

By Sara Rosenberg

New York, Nov. 30 – Mattress Firm Holding Corp. plans to use about $740 million in new debt to help fund its acquisition of HMK Mattress Holdings LLC, the holding company of Sleepy’s and related entities, company officials said in a conference call on Monday.

The company expects the new debt to include an add-on to its existing term loan, and it may potentially utilize its ABL revolver as well, officials continued.

Under the agreement, Sleepy’s is being bought for $780 million, subject to working capital and other customary adjustments.

Other funds for the transaction will come from cash on hand.

Pro forma for the transaction, leverage will be around 4 times, officials added in the call.

Closing is expected in the first half of Mattress Firm’s fiscal year 2016, subject to expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other regulatory approvals.

Barclays acted as exclusive financial adviser to Mattress Firm, and Morgan Stanley & Co. LLC acted as exclusive financial adviser to Sleepy’s.

Mattress Firm is a Houston-based mattress retailer. Sleepy’s is a Hicksville, N.Y.-based mattress retailer.

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