Bedding products provider Purple Innovation completed a refinancing, as Coliseum Capital Management and No Street Capital, through certain funds and accounts, assumed Purple’s two primary outstanding debt facilities — an ABL credit agreement and a term loan credit agreement — from the company’s previous lenders.
At closing, the facilities will be consolidated into a new, upsized term loan of $61 million with approximately $21 million of incremental available capital after expenses, a payment-in-kind interest option and an additional incremental term loan in the amount of up to $19 million available subject to agreement by the parties on terms. Immediately preceding the transaction, Purple’s net liquidity, including cash and cash equivalents as well as ABL availability, was approximately $26 million. Subsequent to the transaction, the company’s cash and cash equivalents were approximately $48 million. This new term loan also removes restrictions and requirements customarily associated with an ABL credit agreement. In connection with entering into the new term loan, Purple issued warrants to the lenders to purchase 20 million shares of the company’s Class A common stock at a price of $1.50 per share, subject to certain adjustments.
An independent special committee of Purple’s board of directors directed and negotiated the transaction with the assistance of the company’s management team and legal advisors. Following the special committee’s evaluation of alternatives and extensive negotiations, the special committee unanimously voted to approve the transaction.
In 2023, Purple embarked on its “Path to Premium Sleep” strategy to improve the Company’s long-term growth prospects and competitiveness. This includes the launch of a new product portfolio and enhanced brand positioning.
“Over the past six months, Purple has taken several important steps to return to profitability and long-term growth,” Rob DeMartini, CEO of Purple, said. “We are pleased with both our strengthening wholesale partnerships and the response we are seeing in our direct-to-consumer channels, as evidenced by our anticipation that fourth quarter net revenue and adjusted EBITDA will be within our guidance range, and look forward to building on this momentum in the year ahead.
“We believe the company is positioned to grow revenue in 2024, despite challenging industry conditions, and with specific cost saving initiatives under way, we also expect incremental improvements in EBITDA and cash flow. We are confident that with continued, focused execution by our team and a considerably strengthened capital structure, we are well positioned to lean into our growth initiatives and continue to take market share. We look forward to sharing more specific insight into our 2024 expectations on the fourth quarter earnings call.
“This transaction places our company on strong financial footing and reaffirms our unwavering commitment to meeting the needs of our wholesale partners, direct customers and suppliers.”
