By Becky Yerak

Mattress Firm Inc. said it expects to emerge from bankruptcy protection in the coming days with a smaller footprint and a stronger balance sheet.

Judge Christopher Sontchi signed off on the company's chapter 11 plan at a hearing Friday in U.S. Bankruptcy Court in Wilmington, Del. The plan gives a large stake in Mattress Firm to bondholders but calls for existing owner Steinhoff International Holdings NV to retain control.

The nation's largest mattress seller, which f iled for bankruptcy protection last month, spent much of its case working with its landlords to restructure its leases.

The company is closing about 700 stores as part of its bankruptcy and company lawyers said Friday that it has amended leases on more than 1,000 other locations. Another 500 additional stores "remain subject to negotiation."

Mattress Firm expects to operate 2,600 stores upon emerging from chapter 11.

The bankruptcy-exit plan had triggered about 53 objections, many from landlords. All were resolved, the company said, with the last one occurring "literally on the courthouse steps."

Mattress Firm, which has annual revenue of $3.2 billion, has said suppliers and contractors will be paid in full.

The Houston-based retailer had acquired dozens of rivals over the past decade, leading to a glut of stores.

The bankruptcy filing follows a deal that Mattress Firm's troubled parent company, Steinhoff International Holdings NV, struck with its bondholders to hand them a 49% stake in the retailer. Steinhoff took Mattress Firm private two years ago for $3.8 billion.

Steinhoff will retain control of the rest of the shares.

Mattress Firm entered chapter 11 with total debt of about $3.6 billion, and is emerging with $525 million of exit financing, a spokeswoman said.

The bankruptcy of Mattress Firm and dozens of related entities highlighted a misstep for the bedding retailer and Steinhoff, which has been called "Africa's IKEA." Steinhoff, whose purchase of Mattress Firm marked its entry into the U.S. market, has been caught up in an accounting scandal that erupted in December. Its creditors, who hold billions of dollars of the company's bonds, agreed to suspend all payments on its debt for three years.

Write to Becky Yerak at becky.yerak@wsj.com

(END) Dow Jones Newswires

November 16, 2018 12:54 ET (17:54 GMT)

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