Moody's may downgrade Furniture Brands

Moody's Investors Service said it placed Furniture Brands International Inc.'s Ba1 corporate family and probability-of-default ratings and Ba1 $400 million guaranteed revolving credit facility due 2011 under review for possible downgrade following the company's disclosure in its 10-K report that as of March 31, it will likely not be in compliance with certain financial covenants in its unsecured revolving credit facility and note purchase agreement.

Although the company is negotiating to amend the facilities to include less restrictive covenants, the negotiations could result in economic concessions to the lending groups including increased costs, reduction in the size of the revolver or other modifications to the terms and conditions of the agreements, the agency said.

The review will focus on Furniture Brands' ability to amend its credit facility and note purchase agreement in a timely manner, the terms and conditions of the amended facilities and the company's expected quarterly cash flow and liquidity profile, Moody's said.

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