Serta Simmons Bedding emerges from Chapter 11 bankruptcy

DORAVILLE, Ga. – Serta Simmons Bedding LLC announced that it has concluded its financial restructuring
and emerged from Chapter 11 bankruptcy.

“The financial restructuring process we completed today signifies an important step forward that will enable us to accelerate our turnaround and strengthen our leadership position in the market,” said Shelley Huff, CEO. “The Serta and Beautyrest brands in our portfolio have a deep heritage in innovation and have played meaningful roles in the lives of consumers for generations. With our financial restructuring behind us, we are taking steps to drive growth by getting back to our innovation roots, reinvesting in our iconic brands, and nailing the fundamentals of our business with a focus on commercial and supply chain excellence.”

It also said it is moving forward with a turnaround that follows these strategies:

+ Leading with Product Innovation – The company said it is “bringing significant newness to the market this year through the refresh of the vast majority of its product portfolio. Looking ahead, SSB will more frequently update its product mix to deliver consumer-driven
innovations as well as high-value products across brands and price points.”

+ Brand Reinvigoration – This involves boosting marketing investments and sharpening its brand positioning to create greater
differentiation for the brands in its portfolio, and also maximizing the potential of each brand.

+ Commercial Excellence – The company said that as it brings new products to the marketplace, it remains focused on better supporting retail partners and their sales associates to drive sales growth. The company is also “leveraging its direct-to-consumer platforms to test new shopping concepts and improve the omnichannel consumer experience.”

+ Operating a High-Performing Supply Chain – The company said the “investments SSB continues to make in its supply chain are enabling the company to efficiently deliver quality products and excellent service levels to retail partners and sleepers.” Supply chain enhancements include the implementation of new processes and technology and the “optimization and upgrading of its manufacturing network.”

“As we execute our turnaround, we will become an even stronger partner to retailers and will help them better serve their customers with our trusted brands and refreshed product portfolio,” Huff said.

The company also has appointed a new board of directors. Previous board members Huff and Brandi Thomas (group vice president and chief audit executive, General Electric) will continue to hold board positions. Private equity investor Mark Genender (managing partner, Bristol Growth Capital LLC), who previously sat on the Simmons board, will serve as chairman.

The rest of the board is made up of business leaders with relevant experience in manufacturing, consumer durables and retail. They include Charlie Eitel (former CEO, Simmons Bedding Co.), Jim Fogarty (CEO, FullBeauty Brands), Alan Shaw (former president and CEO, North America, Electrolux), and an additional board member to be announced.

“I look forward to partnering with Shelley and the management team, as well as the rest of the board of directors and the company’s investors, to help advance SSB’s turnaround effort,” Genender said. “Serta and Beautyrest are among the most valuable brands in the industry. These brands, in combination with SSB’s strategic areas of focus, executive leadership and investor support, will drive the next phase of growth for the company.”

As part of its reorganization, the company said it reduced its funded debt from $1.9 billion to $315 million. This in turn lowers the company’s annual cash interest expense by more than $100 million, which the company said will help drive more investments back into the business. It also has obtained a $100 million revolving credit facility that will combine with existing cash assets and cash generated from operations to provide additional “financial flexibility to support the company’s strategic initiatives.”

During the Chapter 11 process, Weil, Gotshal & Manges LLP served as SSB’s legal counsel, dEvercore Group LLC. served as SSB’s investment banker and FTI Consulting Inc. served as SSB’s financial and restructuring adviser. Gibson, Dunn & Crutcher LLP served as legal counsel, and Centerview Partners served as financial adviser and investment banker, to an ad hoc group of SSB’s priority lenders.

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