Hedge fund Adage Capital said it is prepared to discuss alternative-financing arrangements for the company, and "is willing to provide such financing at a cost significantly less dilutive than that offered" through a deal with private-equity firm Sterling Partners that shareholders rejected last month. Adage Capital didn't specify what type of financing it would offer. Select Comfort, a mattress maker and retailer, has amended its credit agreement with bank lenders after shareholders rejected a proposed $35 million infusion from Sterling Partners and hedge-fund Clinton Group that would have given the two a majority stake in the company. Adage Capital owns 6,765,000 shares (14.8%). The firm bought 200,000 on Aug. 28 and Aug. 29 at $1.81 to $1.95 each.

Select Comfort (SCSS) has agreed to issue to Sterling Capital Partners 50 million shares of common stock at a price of 70 cents per share. Clinton Group and Sterling entered into an agreement whereby Clinton has the right to coinvest in the transaction in an amount up to $5 million. On Aug. 27, Select Comfort's shareholders narrowly rejected the proposal. Clinton has requested a recount, which is being conducted.

Hedge fund Clinton Group said that it will vote for and participate in a $35 million financing transaction that the mattress maker entered into with private equity firm Sterling Partners in May. Under the terms of the deal, Sterling Partners agreed to purchase 50,000,000 shares of Select Comfort for 70 cents apiece, giving the firm a 52.5% controlling interest. The agreement also gives Sterling control of Select Comfort's board, and the private equity firm intends to replace the mattress maker's current chief executive officer, William McLaughlin, with its former chairman and one-time interim CEO, Patrick Hopf. Clinton Group supports the transaction, which is up for a shareholder vote on Aug. 27, and has entered into an agreement with Sterling Partners to participate in the deal -- through a $5 million investment. The money will go into a new limited-liability corporation set up by Sterling Partners for the purpose of its investment in Select Comfort. "We support the [Sterling Partners' investment], and believe it to be in the best interests of the issuer's shareholders," Clinton Group stated in its Schedule 13D. " will improve [Select Comfort's] current capital structure, allowing it to address its liquidity needs and pursue long-term growth opportunities that become available." Clinton Group owns 3,262,638 shares (7.2% of total outstanding). The firm sold 429,807 shares from Aug. 5 to Aug. 14 at prices ranging from $2.27 to $2.89 each.

Best Product in group

Clinton Group called for replacement of Select Comfort's CEO, Bill McLaughlin, and revision of Select's marketing strategy. The group also expressed disappointment that the Minneapolis bed retailer had declined its request for two board seats. Clinton Group suggested that Select Comfort revise its marketing strategy to refocus on direct marketing, and immediately halt all new store openings and unnecessary capital expenditures until sales improve. Clinton Group holds 3,469,647 shares (7.73% of the total outstanding).

Contrarian

I made a bunch of cash on them several years ago so this is a sentimental pick that I went back to.

like the product

aging baby boomer-luxury trend

fools pick

Motley Fool's biggest ur-fool pick. Matresses!? We don' need no stinkin' matresses!

worked well for years