Tempur-Pedic International Inc, the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced it has elected to redeem all of its outstanding 10 1/4 percent Senior Subordinated Notes due 2010.
The $97.5 million aggregate principal amount of outstanding notes will be redeemed in full on or about December 29, 2006, at an approximate redemption price of 108 percent of the principal amount plus accrued interest.
"We are pleased to announce the early redemption of our senior subordinated debt. As a result of this transaction, we anticipate significant interest savings."
"In addition, this transaction will eliminate the subordinated debt's restrictive provisions, which have been a limiting factor on corporate initiatives, including share repurchases," stated H. Thomas Bryant, President and CEO.
The redemption of the notes is expected to be financed primarily with borrowings under the Company's U.S. revolving credit facility.
The Company has received a commitment letter with its senior lender group to expand its U.S. revolver by $70 million. Based on current interest rates under the revolving credit facility, interest savings are estimated to be in excess of $2 million annually, net of tax.
In connection with this transaction, the Company anticipates recognizing one-time charges in the fourth quarter of 2006 of approximately $7 million, net of tax.
This charge will consist of approximately $5 million for the redemption premium and approximately $2 million for a non-cash write-off of unamortized debt issuance costs.
The Company also noted that this one-time charge was not contemplated at the time the Company last updated its guidance for 2006, and the Company expects that this charge would be treated as a pro forma item for purposes of presenting pro forma net income and EPS for the fourth quarter and full year 2006.
Tempur-Pedic International Inc
marketing@alchempro.com
