Lexington, Kentucky – Tempur Sealy is giving a $14m cash injection to Innovative Mattress Solutions (IMS), a retailer that has taken Chapter 11 bankruptcy protection.
The mattress maker describes the payment as debtor-in-possession financing for the company, which operates 142 stores.
These operate as Sleep Outfitters, Mattress Warehouse and Mattress King in south-eastern US states.
Tempur CEO Scott Thompson said: 'Innovative Mattress Solutions has served over a million consumers and built equity for their and our brands in their markets.
'We believe IMS's overextended retail footprint and thin capital structure were not designed to effectively respond to the competitive pressures of the recent retail environment. This caused the unexpected need for bankruptcy protection.
'We will review strategic alternatives during the bankruptcy process. We will focus on what is best for Tempur Sealy consumers in the affected markets.'
Tempur Sealy said it will fund the finance though its senior secured credit facility. This means it will not affect adjusted EBITDA in the fourth quarter of 2018. The company will make a provision of $21 m in the quarter.
The company added that IMS accounted for less than 2% of its global net sales in 2018.
Separately, a different retailer called Mattress Warehouse which is based in Frederick, Maryland released the following statement:
'Mattress Warehouse (SleepHappens.com), is headquartered in Frederick, Maryland, and operates 250 + stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, West Virginia, North Carolina, and South Carolina. Mattress Warehouse, INC has absolutely no affiliation with Innovative Mattress Solutions, INC. This filing of Chapter 11 bankruptcy has no bearing on the Mattress Warehouse (sleephappens.com) organisation or their relationships with their vendors, and landlords. They have a strong financial footing with no debt and consistently growing sales.'
