Sleep Number Initiates Voluntary Bankruptcy Process to Merge with Sleep Country Canada
Sleep Number announced that it has entered into an agreement to combine with Sleep Country Canada. To facilitate the combination, Sleep Number initiated a voluntary Chapter 11 sale process. Through this process, Sleep Number fully expects to continue its day-to-day operations, including serving customers with its newest product, servicing warranties and delivering mattresses in homes. Customers can continue to shop for the company's products online and in stores nationwide and, following the close of the transaction, Sleep Number plans to continue to assemble its products in the United States. Throughout this process, Sleep Number fully expects to continue serving customers. Sleep Number initiated a voluntary Chapter 11 sale process in the U.S. Bankruptcy Court for the District of New York. The transaction is being undertaken pursuant to Section 363 of the U.S. Bankruptcy Code. As part of this process, Sleep Country Canada will serve as the "stalking horse" bidder in a court-supervised sale process. Accordingly, the proposed transaction is subject to higher and better offers, court approval and other closing conditions. Sleep Number expects to secure up to $260M of debtor-in-possession financing, including up to $65M in new financing. Following court approval, this DIP financing, combined with cash generated from Sleep Number's ongoing operations, is expected to support the business during the court-supervised process. The company has filed a number of customary motions seeking court authorization to support its operations during the court-supervised process, including the payment of employee wages and benefits without interruption. Sleep Number fully expects to pay suppliers for goods and services provided after the filing date. Sleep Number has already been undertaking a review of its store footprint and, in connection with this process, the company will continue this work with the intention of maintaining as many retail locations as possible based on profitability. A&G Real Estate Partners is assisting the company with this effort. In connection with the start of the court-supervised process, Sleep Number has filed a motion with the court to reject leases of 44 non-operational locations, which were already closed and not serving customers.
