Moody’s cuts Serta Simmons loans

Moody’s Investors Service said it downgraded Serta Simmons Bedding, LLC’s first-lien term loan to Ca from Caa3, and its second-lien term loan to C from Ca.

At the same time, Moody’s affirmed Serta Simmons’ corporate family rating at Caa3, and its probability of default rating at Caa3-PD. The outlook is negative.

“These actions follow Serta Simmons’ entry into an agreement in principle with a majority of lenders of its first-lien and second-lien term loans to recapitalize the company by allowing for certain new super priority tranches in exchange for existing debt at an implied valuation level that is subpar relative to the initial investment. In total, the proposed transaction will reduce the company’s funded net debt burden by approximately $400 million,” Moody’s said.

Moody’s said it views the transaction as a distressed exchange.

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