A bankruptcy court judge in Maryland has approved the sale of Classic Sleep Products to Classic Brands LLC, which was formed by Classic Sleep Products’ management team and the company’s Chinese manufacturing partner.
The management team, led by Chief Executive Officer Mike Zippelli, will increase its majority ownership stake in the business with funding provided by JMX Capital Partners and Classic’s senior lender, CIT Commercial Services. JMX is partially owned by Xiong Yu of Fujian, China–based Delandis Trading Corp., Classic’s long–time manufacturing partner. Together, the parties are contributing $10 million to recapitalize the company.
The court approved the Jessup, Md.–based company’s bankruptcy plan and sale within a month of the company’s filing. Classic has said there will be no disruption of service to its customers, vendors or suppliers during the transition process. The deal was expected to close in March or April.
“We see this move as a very exciting opportunity to solidify Classic’s position as one of the leading value brands in the United States. This strong infusion of capital will strengthen our current business and position the company for dynamic future growth,” Zippelli said.
The business arrangement between the U.S. and Chinese companies isn’t a licensing deal, “but rather our own people working in China to produce a better–made, value–priced mattress,” he said.
Zippelli continued: “When you look at the traditional problems a Chinese manufacturer has in entering the U.S. market—the lack of a sales force, communication issues, poor customer service and logistics—this was something our domestic team excelled at. Meanwhile, they could make a fantastic product well below our domestic cost. Together, we have become quite a team.”
“Our relationship with Classic has enabled us to better understand and appreciate the U.S. home furnishings market. This deal will enable us to expand the depth of our relationship and we are quite excited about the opportunities for the future,” Yu said.
Classic Brands and Delandis are constructing a new mattress manufacturing facility in Fujian. Completion is expected in 2011.