S&P lowers AOT Bedding outlook to negative, rates loans BB-, B

Standard & Poor's said it revised its rating outlook on AOT Bedding Holdings Corp. to negative from stable.

All ratings on the company, including the B+ corporate credit rating, were affirmed, the agency said, adding that the ratings on the existing bank facilities will be withdrawn at the close of the transaction.

At the same time, S&P said it assigned its BB- bank loan rating and its 1 recovery rating to the company's proposed $450 million of first-lien senior secured credit facilities.

In addition, the agency said it assigned its B bank loan rating and its 3 recovery rating to the company's proposed $210 million second-lien senior secured credit facility.

The second-lien facility is rated one notch below the corporate credit rating and is assigned a 3 recovery rating, indicating second-lien lenders can expect meaningful recovery of principal in the event of payment default, the agency said.

According to S&P, the speculative-grade ratings on AOT Bedding reflect its narrow business focus, aggressive financial policy and highly leveraged financial profile while somewhat mitigating these factors are the company's well-recognized brands, solid market position and the mattress industry's relatively stable demand and significant barriers to entry.

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