Moody's downgrades Furniture Brands

Moody's Investors Service said it downgraded Furniture Brands International Inc.'s corporate family and probability-of-default ratings to Ba3 from Ba1 and its $400 million guaranteed revolving credit facility due 2011 to Ba3 (LGD4, 59%) from Ba1.

The ratings remain on review for further downgrade, where they were placed in March.

In addition, a speculative grade liquidity assessment of SGL 4 was assigned.

"The downgrade reflects our concerns over the continuing softness across all brands, which has been more severe than originally expected," Kevin Cassidy, vice president and senior analyst at Moody's, said in a written statement. "This weakness, coupled with the heavy discounting to reduce inventory levels, will result in credit metrics that are no longer consistent with a Ba1 rating, and we do not expect that the company's credit metrics will return to its previous levels in the next couple of years."

The company is negotiating its credit facilities to include less restrictive covenants, but the talks could end in economic concessions to the lending groups, such as increased costs, revolver size change and pledging assets as collateral, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.