TEXT-S&P puts Sealy rating on watch positive on Temper-Pedic deal

Overview
-- U.S. based bedding manufacturer Sealy Corp. has agreed to be
acquired by Tempur-Pedic International Inc. (not rated) in a transaction
valued at about $1.3 billion.
-- We believe that Sealy's credit profile will be stronger following its
merger with the larger and financially stronger Tempur-Pedic.
-- We are placing all of our ratings on Sealy and its subsidiary,
including the 'B' corporate credit rating, on CreditWatch with positive
implications.

Rating Action
On Sept. 27, 2012, Standard & Poor's Ratings Services placed all of its
ratings on Sealy Corp. and its subsidiary, including the 'B' corporate credit
rating, on CreditWatch with positive implications, meaning we could raise or
affirm the ratings following the completion of our review.

As of Aug. 26, 2012, Sealy Corp. had $760.5 million of reported debt
outstanding.

Rationale
The CreditWatch placement follows the announcement by Tempur-Pedic
International Inc. that it has made an offer to acquire Sealy Corp. and Sealy
has accepted, in a deal valued at about $1.3 billion. We understand that
Tempur-Pedic has received commitments for $1.77 billion in credit facilities
and a $350 million bridge loan to fund the transaction. Pending regulatory
approvals, the company expects the transaction to close in the first half of
2013. We believe the transaction will strengthen Sealy's credit profile
through a stronger combined business risk profile and improved credit
measures. Currently, Temper-Pedic has high margins and low leverage, given its
moderate debt levels. The combination of the two companies will create a $2.7
billion global bedding manufacturer, with a leading market share of the fast
growing U.S. specialty bedding segment.

Currently we view Sealy's business risk profile as "weak" and its financial
profile as "highly leveraged." We estimate that total adjusted leverage for
the 12 months ended Aug. 26, 2012, was about 6.4x, and is currently in the
range of indicative ratios for a highly leveraged financial risk profile,
which includes leverage of more than 5x. Following this transaction, we
estimate that pro forma leverage for the combined company could be around 4x,
closer to indicative ratios for an "aggressive" financial risk profile.

CreditWatch
We will resolve the CreditWatch listing when more information regarding the
transaction and related financing becomes available. We will then assess the
company's financial policy and the impact of the company's new capital
structure on existing ratings.

Related Criteria And Research
-- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18,
2012
-- Use of CreditWatch and Outlooks, Sept. 14, 2009
-- Key Credit Factors: Business And Financial Risks in the Branded
Consumer Products Industry, Sept. 10, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List
Ratings Put On CreditWatch
To From
Sealy Corp.
Corporate credit rating B/Watch Pos/-- B/Stable/--

Sealy Mattress Co.
Senior secured
10.875% notes due 2016 BB-/Watch Pos BB-
Recovery rating 1 1
PIK convertible notes
due 2016 B/Watch Pos B
Recovery rating 4 4
Subordinated
8.25% notes due 2014 CCC+/Watch Pos CCC+
Recovery rating 6 6

Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings affected
by this rating action can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left
column.