Simmons Bedding Co. set to file bankruptcy protection

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Monday, October 5, 2009

News Simmons Bedding Co. set to file bankruptcy protection

Posted By Kimberly Lawson on Mon, Oct 5, 2009 at 11:57 AM

Everyone's heard of the Simmons company, whether you realize it or not. Remember those commercials with the bowling ball being dropped onto the mattress? (If not, see below).

It's a shame when a 135-year-old brand files for bankruptcy. Oh wait. The owners are still raking in the dough. What the?

Simmons says it will soon file for bankruptcy protection, as part of an agreement by its current owners to sell the company — the seventh time it has been sold in a little more than two decades — all after being owned for short periods by a parade of different investment groups, known as private equity firms, which try to buy undervalued companies, mostly with borrowed money.

For many of the company’s investors, the sale will be a disaster. Its bondholders alone stand to lose more than $575 million. The company’s downfall has also devastated employees like Noble Rogers, who worked for 22 years at Simmons, most of that time at a factory outside Atlanta. He is one of 1,000 employees — more than one-quarter of the work force — laid off last year.

But Thomas H. Lee Partners of Boston has not only escaped unscathed, it has made a profit. The investment firm, which bought Simmons in 2003, has pocketed around $77 million in profit, even as the company’s fortunes have declined. THL collected hundreds of millions of dollars from the company in the form of special dividends. It also paid itself millions more in fees, first for buying the company, then for helping run it. Last year, the firm even gave itself a small raise.