NEW YORK, Fri Mar 23, 2012 – Sealy Corp. on Friday defended private equity firm KKR & Co. LP, its largest shareholder, against a hedge fund’s allegations of mismanagement and conflicts of interest that have led to the mattress maker losing 90 percent of its market value.
In a letter to Sealy earlier this month, H Partners Management LLC, which has a 14.5 percent stake in the company, took aim at KKR, not just over its management decisions but also over the conduct of Capstone, KKR’s branded team of consultants.
On Friday, Sealy published a letter sent by Gary Morin, chairman of its nominating and governance committee, to H Partners to address the hedge fund’s demands and rebut its claims.
“We continue to be open to constructive suggestions from shareholders that are in the long-term interest of the company,” Morin wrote.
“However, we do not believe that your combative and public discourse is constructive as we seek the ideal candidate to lead our business and work to improve the company’s performance for the benefit of all our shareholders.”
Sealy, which was started by cotton gin builder Daniel Haynes in the late 19th century, was taken public by KKR two years after its acquisition from another private equity firm, Bain Capital LLC, for $1.5 billion, in 2004.
Since an initial public offering in 2006, Sealy shareholders have collectively seen equity value reduced by $1.3 billion, or about 90 percent.
Capstone has so far been eager to advertise its work on Sealy, featuring words of praise on KKR’s website from Sealy Chief Executive Lawrence J. Rogers, who is set to retire this year once a successor for the troubled company is found.