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Mattress Firm Holdings Signs $125MM ABL With Barclays, Others

October 21, 2014, 07:53 AM
Filed Under: Retail

Mattress Firm Holding Corp. (the Company) announced the completion of its acquisition of all of the outstanding equity interests in The Sleep Train, Inc. for an aggregate purchase price of $425 million, subject to working capital and other customary adjustments, along with the assumption of certain additional liabilities totaling approximately $15 million.

The Company also announced today that it entered into a new senior secured credit facility with Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, and UBS Securities LLC, as joint bookrunning managers and joint lead arrangers. The senior secured credit facility is comprised of (i) an asset-based revolver of $125 million that includes a sublimit for letters of credit and swingline loans, subject to certain conditions and limits and (ii) a term loan B borrowing of $720 million.
Approximately $49 million of proceeds were drawn under the asset-based revolver at closing. The asset based revolving loan will mature on the fifth anniversary of the closing, and the term loan B borrowing will mature on the seventh anniversary of the closing. The Company’s existing credit facility, including its outstanding term loan borrowing, was terminated upon the closing of the transaction.

The Company expects to receive future annual cash income tax benefits of approximately $11 million over the next 15 years from deductible tax basis goodwill generated from the transaction, subject to the Company’s ability to generate future taxable income. Sleep Train operates approximately 310 specialty mattress retail stores located in California, Oregon, Washington, Idaho, Nevada and Hawaii, and reported net sales of approximately $471 million for the 2013 fiscal year.

Barclays, Inc. acted as exclusive financial advisor to Mattress Firm. Norton Rose Fulbright acted as legal counsel to Mattress Firm in connection with the transaction. Prairie Capital Advisors, Inc. provided a fairness opinion to the trustee of The Sleep Train, Inc. Employee Stock Ownership Plan in connection with the transaction. Shartsis Friese LLP acted as legal counsel to Sleep Train in connection with the transaction.

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