Simmons Announces Layoffs

November 16, 2008  by in UnCategorized   

By Home Furnishings Business in Bedding on November 2008 Atlanta-based Simmons, which delayed its earnings announcement last week to engage with talks with its lenders, said Friday it is reducing its salaried workforce by 20 percent in response to challenging economic environment.

The voluntary and involuntary layoffs affect all levels and divisions of the company.

“The decision to move forward with a workforce reduction is never easy, but we determined that it was necessary in order for Simmons to weather the economic downturn and be properly positioned when the economy recovers,” said Simmons President and CEO Larry Rogers. “This past year has been very difficult for the entire bedding industry, which, in turn, has affected our retail customers and our company. Notwithstanding these reductions, Simmons will continue to provide our customers with the superior quality, service and support for which Simmons is known in the industry.”

Last week, the company stated it is “seeking a forbearance agreement related to a senior credit facility in order to have more time to negotiate an amendment” that will provide revised financial covenants into 2010.

On Oct. 21, Simmons Co., the holding company for Simmons Bedding, released an announcement stating that it was seeking the consent of its senior lenders to amend its senior credit facility after falling out of compliance with a “maximum leverage ratio covenant.” The senior credit facility provides for a $75 million revolving loan facility and a $465 million tranche D term loan facility.

In the Oct. 11 announcement, Simmons Bedding officials also said the company expected that its net sales for the third quarter would be down 10 percent to 13 percent from the same period in 2007. It reported that cash on hand on Sept. 27 was $62 million to $64 million and the company’s $75 million revolving credit facility was fully drawn.