Sealy Directors Mismanaged Mattress Firm, Investor Claims

Sealy Corp., the world’s largest bedding maker, and its directors were sued by a shareholder who contends they mismanaged the company by allowing 44 percent stakeholder Kohlberg Kravis Roberts & Co. undue influence.

The shareholder also questions the propriety of more than $20 million in payments to Kohlberg Kravis Roberts since 2006 and continuing consulting fees in addition to “false and misleading statements” about payments, amid millions of dollars in losses and allegedly adverse publicity.

“Board members have failed to disclose information about the nature of KKR’s relationship with the company and the provision of large payments to KKR,” the shareholder, Jay M. Plourde, said in a complaint filed July 19 in Delaware Chancery Court in Wilmington.

Plourde is asking a judge to award damages to Trinity, North Carolina-based Sealy by officials for their alleged wrongdoing, as well as legal fees and costs of litigation, according to court papers.

Kohlberg Kravis Roberts, a unit of New York-based international asset management firm KKR & Co., manages assets including private equity, real estate and energy. Neither is a party to the lawsuit. Kristi Huller, a spokeswoman for New York-based KKR, referred calls for comment to Sealy.

Sealy doesn’t comment on pending litigation, Gemma Hart, a company spokeswoman, said in an e-mail.

March Statement

H Partners Management, a 14 percent stakeholder, criticized Sealy in a March 12 statement, saying management deficiencies have stifled performance. H Partners said Sealy has lost 90 percent of its common stock value, or $1.3 billion, since its initial public offering in 2006 through KKR “interference.”

“Sealy’s board is currently comprised of nine directors, most of whom are both beholden” to the head of KKR’s Capstone consulting firm and put “the interests of KKR over those of Sealy,” Plourde said in his complaint.

The complaint includes an H Partners statement that, “Our goal is to resurrect this 100-year-old iconic American manufacturer and to create long-term value for all shareholders.”

Sealy, with about $1.2 billion in sales for fiscal 2011, fell 3 cents, or 1.8 percent, to $1.60 in New York Stock Exchange composite trading at 3:35 p.m. KKR declined 9 cents to $13.91.

The case is Plourde v. Rogers, CA7709, Delaware Chancery Court (Wilmington).

Before it's here, it's on the Bloomberg Terminal. LEARN MORE