Moody's downgrades Oreck

Moody's Investors Service said it lowered Oreck Corp.'s corporate family rating to Caa1 from B2, its probability-of-default rating to Caa2 from B and first-lien revolving credit facility and bank loan to Caa1 (LGD3, 32%) from B2.

All ratings are under review for a further possible downgrade.

The downgrade reflects expectations that the company's liquidity will remain challenged after the company decided to cancel its proposed first- and second-lien credit facilities, which Moody's said could have provided the company with adequate liquidity.

The downgrade also reflects Moody's concerns that the pace of recovery for the direct response business may be more protracted than expected, the agency said. The limited liquidity may impede the company's ability increase investment in marketing, product development and facility consolidation.

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