S&P cuts Healthy Directions to CCC+

Standard & Poor's said it lowered Healthy Directions LLC's corporate credit rating to CCC+ from B-.

The agency also downgraded to CCC+ from B- the $10 million revolving credit facility bank loan and $100 million first-lien term loan bank.

The outlook remains negative.

Healthy Directions amended its financial covenants on Sept. 11, but S&P said it believes that challenging economic conditions and the company's weak operating performance make a covenant breach a possibility.

Ratings reflect the small size and narrow product focus of Healthy Directions, formerly Phillips Health LLC, in the intensely competitive vitamin, mineral and supplement retailing industry, the agency said, as well as poor operating trends, limited cushion under its amended financial covenants and high debt leverage.

Despite debt reduction required by a free cash flow sweep under the terms of the credit facilities, the agency said the issuer's total debt-to-EBITDA ratio remains high at about mid 3 times.

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