Moody’s: Serta Simmons loans B1, B3; view negative

Moody's Investors Service said it revised the outlook for Serta Simmons Bedding, LLC to negative from stable due to the very high leverage resulting from the significant dividend recapitalization the company is pursuing.

The B1 corporate family rating was affirmed.

The agency also assigned a B1 rating to the company's new $1.9 billion first-lien term loan and a B3 rating to a new $500 million second-lien term loan.

Proceeds from the first- and second-lien term loans, combined with over $50 million of cash on hand, will be used to repay about $1.8 billion of existing debt and pay a $670 million dividend.

"The change in the outlook to negative reflects the increase in leverage to around 6.5 times pro forma from 5 times and a more aggressive financial policy than we were expecting," Moody’s senior credit officer Kevin Cassidy said in a news release.

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