Select Comfort, Sterling Partners Come to New Agreement
October 5, 2009
Specialty bedding supplier and retailer Select Comfort Corp. (NASDAQ: SCSS) has terminated the securities purchase agreement that it had entered into with Sterling Partners in May and entered into a new purchase agreement.
As part of the termination agreement, the companies have agreed to release claims relating to the original agreement.
Under terms of the new agreement, Sterling Partners has the right through June 2010 to invest $10 million in exchange for 2.5 million shares of the company’s common stock priced at $4 per share and warrants to purchase two million shares of the company’s common stock at an exercise price of $0.01 a 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 about 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 of Select Comfort. “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 Tuesday, Oct. 13.
As part of the termination agreement, the companies have agreed to release claims relating to the original agreement.
Under terms of the new agreement, Sterling Partners has the right through June 2010 to invest $10 million in exchange for 2.5 million shares of the company’s common stock priced at $4 per share and warrants to purchase two million shares of the company’s common stock at an exercise price of $0.01 a 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 about 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 of Select Comfort. “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 Tuesday, Oct. 13.
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