Serta Simmons Bedding: Corporate Reorganization Completed

On August 19, 2019 a trade publication indicated that Serta Simmons Bedding had recently undertaken a major organizational restructuring. This was revealed by a senior executive of the firm.

Not by itself earth shattering news, but when associated with the recent devaluation of Barings BDC’s (BBDC) debt position in the company, now discounted from cost by (29%), after being only written down (8%) at 2018 year-end underscores that not all is well. Not helping was the departure on April 17, 2019 of Serta’s CEO and the July 2019 placing the debt on Fitch’s “Loans Of Concern” (similar to the BDC Reporter’s Worry List).

We are currently giving the company a Corporate Credit Rating of 4, in our 1-5 scale. The only BDC with exposure is BBDC with $2.7mn at cost, $3.0 at par and $1.9mn at FMV as of June 2019. The amount of investment income at risk – under $0.200mn – is modest, due to the low interest rate charged.