Moody's lowers Human Touch

Moody's Investors Service said it downgraded Human Touch LLC's corporate family and probability-of-default ratings to Caa3 from Caa1 and its senior unsecured notes rating to Caa3 (LGD5, 79%) from Caa2 (LGD4, 63%). The SGL-4 rating was affirmed, concluding the review for downgrade that began on Feb. 26.

The downgrade reflects the increased probability of default over the next 12 months, the agency said, due to weak liquidity stemming from the upcoming expiration of a revolving credit facility in March 2009 and limited amount of unrestricted cash.

According to Moody's, the downgrade also reflects continued revenue and profitability declines stemming from reduced revenue with key customers and general declines in consumer discretionary spending.

The outlook reflects concerns that the company's liquidity profile may further erode if it is unable to maintain positive cash flow, extend the expiration of its revolving credit facility or sell other assets for cash, the agency noted.

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