KKR & Co., the private equity firm that owns 45 percent ofSealy Corp., is being targeted by the mattress maker'ssecond-largest shareholder for “significant corporate governancedeficiencies” that it says have stifled Sealy's performance.

H Partners Management LLC, which owns 14 percent of Sealy, saidin a letter to the company's corporate governance committee thatKKR has “overloaded” the firm with debt and made strategic errorsthat reduced Sealy's earnings by half. The New York-based investoralso singled out Dean Nelson, head of KKR's consulting unit and aSealy director since 2004, for “excessive” influence on theboard.

“Since Sealy's IPO in April 2006, shareholders have suffered a$1.3 billion, or an approximate 90 percent, loss of common equityvalue,” Usman Nabi and Arik Ruchim of H Partners wrote in theletter dated March 11 and filed with regulators today. “In ourview, this value destruction is due to the poor judgment,interference, and conflicts of interest of one shareholder:Kohlberg Kravis Roberts.”

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