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Simmons Bedding gets forbearance period for senior facility, works toward amendment
By Angela McDaniels
Tacoma, Wash., Nov. 14 - Simmons Co. subsidiary Simmons Bedding Co. entered into a forbearance agreement on Tuesday with the lenders under its senior credit facility, which includes a $75 million revolving loan facility and a $465 million tranche D term loan.
The lenders will forbear from exercising their default-related rights through the earlier of Nov. 26, an occurrence of a default under the agreement or - provided that Simmons Bedding satisfies the conditions under the agreement and provides notice by Nov. 25 - Dec. 10.
Simmons Bedding was not in compliance with some covenants under the facility for the quarter ended Sept. 27 and was unable to secure an amendment to provide a waiver of the events of default before the filing date for the company's 10-Q report.
The company therefore sought the forbearance agreement in order to have more time to finalize the amendment, according to an 8-K filing with the Securities and Exchange Commission.
The amendment will also provide maximum leverage and cash interest covenant relief through the first quarter of 2010 and will add an additional monthly liquidity covenant based on the average business day cash balances, a restriction of payments from Simmons Bedding to Simmons or Simmons Holdco Inc., an extension of the revolver to early 2010 and a higher increase rate.
The margin on the revolving loans and tranche D term loans will be 200 basis points higher during the forbearance period, and the company will pay a 12.5 bps fee.
Deutsche Bank AG, New York Branch is the administrative agent.
Simmons is the Atlanta-based holding company for Simmons Bedding, which manufactures premium-branded bedding products.
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