Visco-elastic bedding maker says move will save over $2M in annual interest


LEXINGTON, Ky. — Specialty bedding manufacturer Tempur-Pedic said it plans to redeem $97.5 million in senior debt this year, which is expected to save it more than $2 million in annual interest.

The senior subordinated notes, due in 2017, carry an interest rate of 10.25% and will be redeemed by Dec. 29 at about an 8% premium over the principal amount, the company said.

Tempur-Pedic will take a one-time charge in the current quarter of about $7 million after tax, including the $5 million redemption premium and a non-cash writeoff of about $2 million in unamortized debt issuance costs.

H. Thomas Bryant, president and CEO, said that in addition to the interest savings, the transaction “will eliminate the subordinated debt’s restrictive provisions, which have been a limiting factor on corporate initiatives, including share repurchases.”

The visco-elastic bedding maker said it will finance the redemption mainly with borrowings under its U.S. revolving credit facility, which a senior lender group has agreed to expand by $70 million.