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Largest 1-800-Mattress Franchise Group Challenges Sale to Sleepy's

 

Offers Less Restrictive “DIP” Financing

 

March 26, 2009 - Consolidated Mattress and Amalgamated Mattress, better known as the franchise operator of 1-800-Mattress/Dial-A-Mattress in New England, Philadelphia, Central and Southern New Jersey, and Florida, has challenged the proposed sale of its New York-based franchisor to longtime rival Sleepy’s.

 

The franchisee is offering the franchisor better terms on “Debtor-In-Possession” (“DIP”) financing than offered by Sleepy’s earlier this week.

Consolidated and Amalgamated, an independent franchise group, whose operations remain entirely outside the present bankruptcy, is operating “business as usual,” and has a strong financial position.

 

The offer was for financing on similar terms, but without the onerous restrictions Sleepy’s placed on the funds in its proposal.

 

Consolidated/Amalgamated President Robert Klein commented, “The financing we’re offering is superior to that proposed in court on Monday in that it contains none of the poison pills.” He went on to say, “The maneuvering that has taken place is highly unusual, and not in the best interests of anyone but Sleepy’s. Before you hand your business to your most aggressive competitor, there needs to be thoughtful consideration given not just to creditors and business interests, but also to the interests of consumers who would face an effective monopoly in many markets.”

 

Klein explained, “The franchisor is trying to push through a backroom deal that it cut with Sleepy’s prior to filing bankruptcy whereby the people who ruined the company would get big paydays, and the creditors would be left holding the bag.”

 

He added, “There has been no impact whatsoever on our operations, period. Other than using the 1-800-Mattress name, we are a separate and independent company. And we are in a strong enough cash position to offer this financing ourselves, continue to run our own operations as normal, and bid for the parent company too.”

 

“It’s rare for a franchisee to be in a position to rescue its franchisor.” said Klein. “If we have the opportunity to strengthen our position while preserving fair competition in the marketplace, we intend to do that.”

 

Klein explained that his company has separate contracts with Sealy, Serta, Simmons, Spring Air, Tempur-Pedic and other suppliers, is current with all payments, operates its own fleet of trucks for delivery, its own sales and service call center, and will continue to fulfill orders placed over the phone or online as normal.

 

Consolidated/Amalgamated was recognized by the Better Business Bureau of Eastern Massachusetts, Maine and Vermont with its coveted “Torch of Excellence Award” for honesty, integrity and ethical business practices in the marketplace three years in a row.

The company also runs an extensive corporate philanthropy program, contributing cash and merchandise to the communities it serves, focusing lately on assisting homeless and military veterans’ causes.

 

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