There was a time, not long ago, that mattress business was terrific. There were big margins and if you were supplying hotels at Vegas, for example, you had it made. In fact, Profit magazine’s top fastest growing companies featured one of Canada’s family businesses, Price Mattress, that manufactured mattresses but managed to sell into the USA back in the good old days.
Gerry Price took a smarter approach. He figured out how to add incremental improvements to the mattresses made at his plant in Toronto, yet charge less than Sealy, Serta and Simmons. He then wooed key retailers with exclusive deals on a mix of attractively priced private-label brands and models licensed by Oklahoma City-based Lady Americana Associates Inc. His resulting revenue growth has been anything but sleepy, from $1.3 million in 2000 to $21.6 million in 2005. This 1,588% increase placed Price Mattress 38th on the 2006 PROFIT 100 ranking of Canada's Fastest-Growing Companies.
Gerry Price was a fighter but did not manage to save his company this recession. So it is no surprise that the Simmons Company, maker of Beautyrest mattresses, said on Friday that it planned to be sold to private investors in a $760 million transaction. The New York Times reported that it would include a bankruptcy filing.
The company said it had support from more than the two-thirds of its noteholders and lenders needed for a prepackaged restructuring planthat would reduce its debt to about $450 million, from $1 billion.
The buyers are Ares Management, a private equity firm, and a unit of the Ontario Teachers’ Pension Plan. The mattress sector has been hurt across the board by the downturn in the economy. The Simmons filing would be on the back of those from Foamex International, a maker of polyurethane foam used in mattresses; Consolidated Bedding, which makes the Spring Air mattress brand; and retailers including 1-800-Mattress and the Mattress Discounters Corporation. The company will put the plan out to a vote soon and expects to file for bankruptcy in 30 to 60 days, a Simmons spokesman said. The bankruptcy could then take two more months, he said.
Simmons has been in negotiations with lenders after it failed in late 2008 to meet loan requirements related to debt associated with the 2003 purchase of the company by the private equity firm Thomas H. Lee Partners from Fenway Partners, another private equity firm, the spokesman said. Simmons said the purchase price included equity injections from the buyers as well as debt commitments from some lenders. Simmons also said it had lined up $35 million of debtor-in-possession financing from existing lenders to keep operating while in bankruptcy. The company said its Canadian and Puerto Rican units were not expected to file for bankruptcy but were among the assets being acquired
Economists are still working to show why they should be in the business of predicting the future trends of business. The Queen may also still be waiting an understandable explanation for why Economists missed last year's big dump in world markets. Now that economies are beginning to recover, Economists are establishing sound causes for the world recession.
