Tempur Sealy Slides After Mattress Firm Files For Bankruptcy
Mattress Firm Chapter 11 bankruptcy: Tempur Sealy stock price is down
, the maker of the mattress brand Tempur-Pedic, dropped about 2% Friday after Mattress Firm filed for Chapter 11 bankruptcy protection. Tempur Sealy shares rallied more than 10% on Wednesday when Reuters reported Mattress Firm was preparing to file for bankruptcy protection.
Mattress Firm, the largest US mattress retailer, announced Friday that it will close 200 stores in the next few days and will exit up to 700 stores within the next 45 to 60 days. The company also said it received 0 million of commitments from debtor-in-possession financing and obtained 5 million of commitments from senior secured credit facilities to support its restructuring.
Mattress Firm used to be a supplier of Tempur Sealy, but the contract was terminated last year, partly because of disagreement over "significant economic concessions."
"The process we have initiated today will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio," Steve Stagner, CEO of Mattress Firm, said in the press release.
"We intend to use the additional liquidity from these actions to improve our product offering, provide greater value to our customers, open new stores in new markets, and strategically expand in existing markets where we see the greatest opportunities to serve our customers."
If Mattress Firm closes 600-1000 stores for restructure, Tempur Sealy could gain million in EBITDA, Seth Basham, an analyst at Wedbush, said in a recent note sent out to clients.
At the time, Basham noted that this was not fully reflected in Tempur Sealy shares, and that the stock could rally to — about 30% above its current price. Basham has an "outperform" rating.
Tempur Sealy has fallen 22% this year.
Video: Mattress Firm Files Chapter 11 Bankruptcy
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