A bankruptcy auction added $114.5m to the price of Sleep Number's assets, and the filing that reports it expects stockholders to get nothing
Two hundred and sixty-seven. That is the number of holders of record Sleep Number Corporation certified to the Securities and Exchange Commission on Monday, on the form that ends its obligation to file anything at all.
The Minneapolis bed maker and its subsidiaries filed voluntary chapter 11 petitions on 12 June in the United States Bankruptcy Court for the Southern District of New York, under the caption In re: Sleep Number Corporation, et al., Case No. 26-11399. It went in with a buyer already lined up. SNBR, Inc., a wholly owned subsidiary of Sleep Country Canada Inc., had signed a stalking horse agreement to take substantially all of the assets for $415m in cash and the assumption of certain liabilities. Then the court ran an auction.
On 18 July the base price in an amended and restated agreement rose to $529,500,000, an increase of $114.5m, and the escrow the buyer had to fund against post-closing adjustments fell from $25m to $10m. The court approved the sale on 21 July. It closed on 31 July.
Where the money went
Cash proceeds were $529.5m. Approximately $267.4m of that was distributed straight back out to repay the debtor-in-possession term loans and the roll-up loans provided by certain of the company's prepetition lenders, together with certain other fees and expenses, and $10.0m went into the adjustment escrow. Then comes the sentence that settles the question for anybody holding the shares. The company does not expect that there will be any proceeds available for distribution to stockholders, either in connection with the asset sale or the ultimate settlement of claims under the plan of liquidation, and upon effectiveness of that plan the outstanding common stock will be cancelled.
So the auction added $114.5m to the price, and the filing anticipates none of it reaching a shareholder.
The exits, in order
Nasdaq filed to strike the common stock on 14 July, under 17 CFR 240.12d2-2(b), on a notice signed the day before by a hearings advisor. The 8-K filed on Monday carries the consequence on its cover page in three words: securities registered pursuant to Section 12(b) of the Act, none. The Form 15 filed alongside it relies on Rule 12g-4(a)(1) and Rule 12h-3(b)(1)(i), and it is that form which carries the count of 267 holders.
One thing the company will not be providing is a set of pro forma accounts showing the business without the assets it has just sold. It told the SEC that it cannot prepare them without unreasonable effort or expense, and directed readers to the monthly operating reports it files with the bankruptcy court instead, while cautioning that those reports are limited in scope, exist to satisfy the court, and are not a basis for an investment decision.
