S&P's Sealy ratings unaffected

Standard & Poor's said its ratings and outlook on Sealy Mattress Co. and parent Sealy Corp. (both B+/stable) are not affected by Sealy Corp.'s filing of a fifth amendment to its registration statement on Form S-1 for a proposed initial public offering of common stock, which increased the size of the proposed IPO to $300 million from $175 million.

The company now expects net proceeds of $277 million instead of the initial $149 million. The incremental amount will be used primarily to pay a one-time cash dividend to the existing stockholders of record prior to the offering date.

The agency said that although it views the use of the incremental proceeds as somewhat aggressive, the dividend is not debt-financed and the company still anticipates using about $120 million of the proceeds from the IPO to redeem a portion of its long-term debt. S&P said it does not expect this reduction in debt to have a material effect on the company's credit measures, but does expect Sealy to apply free cash flow to debt reduction and achieve debt leverage of 4.5x to 5x over the intermediate term.

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