S&P downgrades Serta Simmons Bedding

S&P said it lowered its issuer credit rating on Serta Simmons Bedding LLC to CC from CCC+.

S&P lowered the issue-level rating on the $127 million (outstanding as of Dec. 26, 2020) second-lien term loan due 2024 to C from CCC-. The 6 recovery rating is unchanged.

The agency placed the CCC- rating on the $884 million (outstanding as of Dec. 26, 2020) first-lien term loan due in 2023, the B+ rating on the $200 million first-out super-priority term loan due in 2023 and the B rating on the $851 million second-out super priority debt due in 2023 on CreditWatch with negative implications, meaning S&P could lower or affirm the ratings following its review. The recovery ratings remain 6, 1+ and 1, respectively.

“The downgrade reflects Serta Simmons' announcement that it will repurchase up to $76 million of second-lien debt. We view this proposed tender offer as a distressed restructuring because the capital structure is unsustainable and the company is paying well below par value for the debt,” S&P said in a news release.

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