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Purple Innovation Refinances Debt to Bolster Financial Position

January 23, 2024 2 min read

A conceptual image of a purple mattress in the middle of a bank office, symbolizing Purple Innovation's debt refinancing strategy.

Purple Innovation, a notable player in the mattress industry based in Lehi, Utah, has recently made a strategic move to refinance its debt. 


In late 2022, Coliseum Capital Management, which held a 45% stake in Purple at the time, proposed to buy all outstanding stock at $4.35 per share. However, Purple's board rejected this offer and adopted measures to maintain fair shareholder representation. This led to a legal confrontation, with Coliseum Capital challenging the company's new shareholder dividend plan.

Consolidation of Debt and New Financing Deal:

In a significant financial maneuver, Purple Innovation consolidated an existing loan with a $61 million financing deal involving Coliseum Capital Management and No Street Capital. This arrangement allowed the two backers to assume Purple’s primary outstanding debt lines, marking a pivotal step in the company's financial restructuring.

Details of the New Loan:

The new term loan, totaling $61 million, brings with it approximately $21 million of available capital after expenses. It features a payment-in-kind interest option and the potential for an additional $19 million loan, contingent upon the lenders' agreement. This refinancing strategy not only streamlines Purple Innovation's debt but also furnishes it with a more robust balance sheet and necessary funds for future investments.

Impact on Net Liquidity and Company Structure:

Before this transaction, Purple Innovation reported its net liquidity at around $26 million. The new financial agreement effectively elevates its cash and equivalents to approximately $48 million. Additionally, the new loan eliminates various restrictions typically associated with Asset-Based Lending (ABL) credit agreements, offering more operational flexibility to the company.

Equity Warrants Issuance:

In conjunction with the refinancing, Purple Innovation issued warrants for 20 million shares of its Class A common stock at $1.50 per share to the lenders, subject to adjustments. This move could potentially lead to future equity changes, depending on the stock's performance and the lenders' decisions.

Outlook for 2024:

Purple Innovation remains optimistic about its growth and revenue prospects for 2024, despite facing challenging industry conditions. The mattress company is actively implementing cost-saving initiatives aimed at improving EBITDA and cash flow. With a stronger capital structure and focused execution by its team, Purple Innovation is poised to expand its market share and capitalize on its growth initiatives.


The recent refinancing by Purple Innovation signifies a strategic shift towards financial stability and growth potential. As the company prepares to share more detailed insights in its fourth-quarter earnings call, stakeholders and market watchers are keen to see how these financial maneuvers will translate into long-term success and market competitiveness.