Troubled mattress maker Simmons announced that it did not make it scheduled July 15th bond payment of $7.9 million. The company's bondholders who are hoping for some hail mary bailout as millions of unemployed people upgrade from a hard floor to a memory foam king size are due for a big surprise, even with the extended forbearance they have granted the company. One can hope that the "certain conditions" to be met by July 31 include a clause of 100% equity conversion as that is the only return hopeful investors may hope to extract from the company.
From the press release:
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ATLANTA, July 16 /PRNewswire/ -- Simmons Bedding Company ("Simmons Bedding"), a subsidiary of Simmons Company ("Simmons" or the "Company"), and a leading manufacturer of premium-branded bedding products, today announced that it did not make the scheduled interest payment of $7.9 million due on July 15, 2009 on its $200.0 million 7.875% senior subordinated notes ("Notes"). Under the terms of Simmons Bedding's existing forbearance agreement with the majority of the outstanding holders of the Notes, the holders of a majority of the Notes have agreed to refrain from exercising their rights and remedies under the Notes with respect to such non-payment of interest. Simmons announced on June 30, 2009 that it had reached agreements with the majorities of both its senior bank lenders and holders of its $200.0 million 7.875% senior subordinated notes as required to extend the forbearance periods from June 30, 2009 to August 14, 2009. The extension under the senior bank lenders agreement is subject to meeting certain conditions on or before July 31, 2009.
The Company's cash on hand as of July 14, 2009 was approximately $62 million, which is available to pay operating costs and expenses. The Company continues normal day-to-day business operations.