Select Comfort Negotiates New $10 Million Sterling Partners Investment

Furniture World News

Select Comfort Corporation, a leading bed retailer and creator of the SLEEP NUMBER® bed, announced that it terminated the Securities Purchase Agreement entered into with Sterling Partners on May 22, 2009, and entered into a new Securities Purchase Agreement. As part of the termination agreement, both companies mutually released claims relating to the original agreement. Under terms of the new Securities Purchase Agreement, Sterling Partners has the right through June 2010 to invest $10.0 million in exchange for 2.5 million shares of the company’s common stock priced at $4.00 per share and warrants to purchase two million shares of the company’s common stock at an exercise price of $0.01 per share. Select Comfort can require the investment upon securing an acceptable extended credit agreement from its lenders. With the close of the investment and exercise of the warrants, Sterling Partners will own approximately 8.9 percent of the company’s common stock. “This agreement positions us to pursue additional capital, which combined with the Sterling investment, will strengthen our financial position and increase our financial flexibility,” said Bill McLaughlin, president and CEO, Select Comfort Corporation. “In addition to exploring additional financing alternatives for the company, we continue to negotiate with our lenders to secure a permanent financing agreement.” The termination date of the current credit agreement is June 9, 2010, with the most recent waiver the company is operating under in effect until October 13, 2009. Select Comfort also stated that sales trends continue to improve, with positive same-store sales growth during August and September. Cost and cash controls implemented during the past 18 months remain in place and continue to be effective. The company anticipates that its third-quarter results will include one-time charges ranging from $3.0 million to $5.0 million associated with the original Securities Purchase Agreement and its termination. About Select Comfort Corporation Founded more than 20 years ago, Select Comfort was ranked the no. 1 bedding retailer in the United States for nine years running.1 Based in Minneapolis, the company designs, manufactures, markets and supports a line of adjustable-firmness mattresses featuring air-chamber technology, branded the Sleep Number® bed, as well as foundations and bedding accessories. SELECT COMFORT® products are sold through its approximately 400 company-owned stores located across the United States; select bedding retailers; direct marketing operations; and online at www.sleepnumber.com.