Mattress Firm talks $730 million term loan spread at 450 to 475 bps

By Paul A. Harris

Portland, Ore., Jan. 14 – Mattress Firm Holding Corp. talked its $730 million incremental first-lien term loan due Oct. 20, 2021 (Ba3/B+), with a 450 to 475 basis points spread to Libor and a 1% Libor floor, at an original issue discount of 98.5 to 99, according to a market source.

The loan comes with six month of soft call protection at 101.

Commitments are due at noon ET on Jan. 28.

Additionally, the company is seeking a $200 million amended and extended ABL revolver, the source said.

Barclays is the lead left bookrunner on the deal.

Proceeds will be used to help fund the acquisition of HMK Mattress Holdings LLC, the holding company of Sleepy’s and related entities, for $780 million, subject to working capital and other customary adjustments.

Other funds for the transaction will come from cash on hand.

With the acquisition, pricing on the company’s existing Libor plus 400 bps term loan, which also matures on Oct. 20, 2021, steps to Libor plus 425 bps.

The company previously said that, pro forma for the transaction, leverage will be around 4 times.

Closing is expected on Feb. 3, subject to customary conditions, including regulatory approvals.

Mattress Firm is a Houston-based mattress retailer. Sleepy’s is a Hicksville, N.Y.-based mattress retailer.

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