Casper Soars After White Knight Rescues It From Fumbled IPO

(Bloomberg) -- Casper Sleep Inc. surged 88%, its biggest one-day jump since the shares debuted last year, after arranging a buyout that will end a hapless tenure as a public company.

Durational Capital Management LP agreed to take the struggling mattress company private for $6.90 a share -- more than double what the stock fetched in the middle of last week -- but still far from the February 2020 initial public offering at $12. Casper has posted a loss every quarter since then, and recently had to seek a waiver from its lender.  

The board of New York-based Casper unanimously approved the deal and insiders who collectively hold a 28% stake plan to vote in favor of the transaction, according to a statement outlining the terms.

Philip Krim, the mattress-in-a-box company’s co-founder and outgoing chief executive, said the deal gives shareholders “the highest value for our stockholders while providing Casper with much-needed capital.” In a separate statement on the quarterly results, Krim blamed supply-chain disruptions and inflation for hurting the company’s cash position. 

New Boss 

Emilie Arel, the company’s president, is replacing Krim as CEO. The company ended the quarter with $43.1 million in cash and equivalents and withdrew its forecasts ahead of the deal, which is expected to be completed in the first quarter. 

The rescue by Durational, a New York private equity firm specializing in consumer companies, didn’t come cheap. Terms of the deal include a bridge loan charging a floating rate of prime plus 6.75%, with a one-time, upfront fee of 1% as well as a 10% end-of-term fee. If the deal doesn’t close by March 15, Casper has to issue warrants equal to 40% of the outstanding amounts of the bridge loan.

Krim owned a 6.8% stake as of March, according to Bloomberg data. NEA Management Co. and Red Cart Ventures were listed as Casper’s top holders.

“The go private agreement comes as a positive surprise and appears to be a win for equity holders given the deteriorating financial position that Casper unveiled,” said Matt Koranda, an analyst at Roth Capital, in a research note.

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