Moody's may cut Sealy ratings

Moody's Investors Service said it has placed the ratings of Sealy Mattress Co. on review for possible downgrade following the recent announcement that the company has signed a definitive agreement to be acquired by affiliates of Kohlberg Kravis Roberts & Co.

The following ratings of Sealy Mattress Company were placed on review for possible downgrade: Senior implied rating of B1; $259 million senior secured AXEL term loans due 2004-2006 of B1; long-term senior unsecured issuer rating of B2; $250 million 9.875% senior subordinated notes due Dec. 15, 2007 of B3; $128 million 10.875% senior subordinated discount notes due Dec. 15, 2007 of B3.

Moody's said KKR agreed to acquire Sealy from a private investment group that includes Bain Capital, Charlesbank Capital Partners, JPMorgan Partners, CIBC Augosy Merchant Fund and BancBoston Capital. The transaction is valued at approximately $1.5 billion, or about 9x adjusted fiscal-year 2003 EBITDA (ended November 2003).

With the transaction, KKR and Sealy management will acquire about 92% of Sealy, with current shareholders retaining the remaining 8%. Sealy shareholders approved the merger, which is expected to close in April 2004 and be financed through a combination of debt and equity.

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