Simmons filed for bankruptcy for the 8th time. Why is the mattress synonymous with fire for more than 100 years?

Wake up from an 800-square-meter bed and start a rich and ordinary day. This is the mattress from a Mary Sue novel, and only its size can justify its luxury.

A mattress is worth millions, and the ex-husband was even ridiculed for wanting to go to Taiwan to get it back. This is a mattress in entertainment gossip. After throwing it again and again, no one can confirm what brand it is.

#微蒙思申请研究技术# rushed to the hot search, and users commented, "So Simmons is a brand! I always thought it was synonymous with mattresses." This is probably the biggest success of a brand, and it is equal to a category in the hearts of users.

But it still has to file for bankruptcy protection, and it has been filed seven times.

Century-old furniture brand files for bankruptcy again

According to foreign media reports, bedding company Simmons will file for bankruptcy protection as early as January next year.

According to sources who did not want to be named, Simmons has been conducting secret negotiations with creditors on the restructuring plan, promising to give some creditors a priority lien (possessing the debtor's property by legal means). In other words, certain creditors are given priority in choosing brand assets, and the promised creditors are more likely to obtain the same amount of property.

The estimated timing of bankruptcy is related to the timing of debts-Simmons' more than $2 billion in debt will mature in 2023, of which an $843 million term loan with a first lien will also mature in November next year.

Advent International, a global private equity firm, acquired AOT Bedding Super Holdings, the parent company of Simmons and Serta, in 2012, which may have been an important reason why Simmons had to file for bankruptcy protection.

Because this acquisition brought huge debts to Simmons.

The acquisition in 2012 was a leveraged buyout of up to US$3 billion. Simmons Group was burdened with US$2.3 billion in debt, and the debt dividend of US$670 million was brought by Advent Capital. Too much debt and not much cash flow, which also makes Simmons, a century-old brand, less confident in responding to the crisis.

Of course, the problems don't stop there.

The impact of the new crown epidemic on offline retail has also caused Simmons to encounter the problem of tight funds; an endless stream of new brands and more famous high-end brands are eroding Simmons' market; The bankruptcy also caused the brand to lose 4.6576 million real money.

With huge internal debts and poor external competition, the survival situation of century-old mattress brands is not very good.

As of the second quarter of 2022, Simmons also has $345 million in cash, down from $518 million at the end of 2021, and its Colleague Brands asset-based revolving credit facility has just $171 million in it. Based on these figures, Moody's Investors Service estimates that Simmons' cash flow for the next year will be about negative $125-$145 million.

Based on Simmons' high debt and cash reserves, Moody's also downgraded the company's rating, believing that the brand is likely to default, file for bankruptcy or debt restructuring in the next few months.

The same story is played seven times, but this bankruptcy is different

Simmons has gone through this process seven times.

This may break the perception of the outside world. After all, most people think that bankruptcy is completely over, but they don't know that if it is bought out after bankruptcy, it can go bankrupt again after tinkering.

This is very similar to the portrayal of Simmons' fate.

External competition and internal weakness may have foreshadowed the gradual decline of Simmons, but it was the "buyers" who really brought Simmons to a dead end. Financial capital likes brands like Simmons the most. They are often severely undervalued and underestimate their specific value. Therefore, buying these brands for repairs and then reselling them is a way to make money in itself.

Simmons has gone bankrupt 7 times, and the market value of one bankruptcy is higher. This is all the capital's thought for this brand owner. They may also care about the brand's profit model or brand reputation, but the most important thing is to use it to borrow money. Mortgage these well-known companies for money, resell after squeezing the profits, and leave the market beautifully.

In such a game of drumming and passing flowers, the flowers themselves have more and more debts, but each person who handles them has never lost money.

Before Advent Capital acquired the parent company of Simmons, it launched a very gimmick $1 auction in order to sell the company at a high price. With a starting price of $1, you can own a bedding company that is famous all over the world, which was widely noticed more than ten years ago.

But $1 may be just a trap, and the $1 billion owed by Simmons still needs to be paid by the new boss. You own all the assets including brand, channel, machine and patent, as well as its debts. Even if the total debt is reduced to about 450 million after the restructuring of the bankruptcy protection process, these debts are not something that ordinary companies dare to bet on.

Therefore, in 2009, the website of the Guangzhou Equity Exchange announced the transfer of Simmons at a price of one dollar, but it was not until 2012 that Advent Capital became the new owner of Simmons.

The same is true for Simmons’ upcoming eighth bankruptcy protection filing. The brand owes huge debts, but Advent Capital has used Simmons to make money over the years. Among other things, in China, AOT, the parent company that Advent once acquired, has already returned a large sum of money.

The acquisition that year not only brought Simmons, but also Serta, a well-known mattress brand. In 2016, Advent Capital bought a Chinese controlling stake in another bedding brand, King Koer, from CITIC Capital. The integration of the two well-known brands becomes Aimeng Group, a sleep solution provider operating these two brands in China.

In 2021, Advent Capital will sell the controlling stake in Aimeng Group to Hillhouse. Sources say the deal could total $2.5 billion.

The original brand assets were split and debts were transferred, dismantled and restructured, but the private capital behind it was able to make a steady profit.

Simmons, the original benchmark, is synonymous with mattresses.

Simmons, which is about to go through its eighth bankruptcy protection, has become an arbitrage tool for capital at this time. The aging of the brand image and fierce market competition may be the last straw that overwhelms the camel's camel, but the fact that the capital is up for sale is the brand management is becoming increasingly difficult core issue.

The eighth bankruptcy protection, Simmons may go the previous way again, but it is getting more and more difficult for the brand to return to the top.

It is undeniable that Simmons is a successful company. In its infancy, the brand was like Apple today, a company that subverted the original model.

In 1870, Simmons, a carton brand, obtained a patent for a woven spring bed, which allowed the founders at the time to deal with the debt crisis and open up new markets. The world's first spring bed was born, and Simmons, who changed careers, became the first manufacturer to mass-produce steel wire woven mattresses.

Because of innovation, Simmons also became the price butcher at that time. In 1889, helical coil springs were introduced to woven mattresses, and Simmons announced its own industry status while taking the price of the original mattress down. Later, in 1925, Simmons invented a machine that could mass-produce individual pocket spring mattresses, so that the brand could sell more mattresses and advertise more.

They have also innovated their own sales model. Customers can experience and order products in offline stores, and then Simmons will deliver the bed to you from 64 warehouses across the country.

At this time, Simmons has also stabilized its high-end image very well, the specific way is not to cut prices. Although the production method is more efficient, the price of mattresses is several times that of ordinary mattresses. Letters of recommendation from Henry Ford and Thomas Edison also made the brand more prosperous by taking advantage of the celebrity effect.

Simmons also became synonymous with mattresses in China at this stage.

▲ The lower right is the advertisement of Simmons

Simmons, which invested heavily in advertising, was very successful in Shanghai. The city with the most purchasing power in China at that time also uniformly called the wire spring bed Simmons. The person who came up with this translated name for the brand in 1933 contributed a lot. In Chinese, Simmons seems to represent sleep, tranquility, and sweet dreams. The successful translation and well-known brand image made it very popular in China at that time.

To this day, many of the beds we use are by Simmons—freestanding tube-spring beds that follow the contours of the body; sofa beds that combine folding springs and mattresses; bed.

Simmons, which has been established for 152 years, has a glorious history.

But even so, he still can only wait for the eighth bankruptcy protection.

Not too funny, not too upbeat.

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