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Moody's cuts Lenox
Moody's Investors Service said it lowered the debt ratings of Lenox Group, Inc., including the corporate family rating to Caa2 from B2.
The outlook remains negative.
According to the agency, the downgrade reflects the company's severely strained financial condition and liquidity that has resulted from lower-than-expected earnings and cash flows in 2006, which, in Moody's opinion, has increased the risk of a restructuring, including the potential for a distressed exchange, in the near to intermediate term.
Lenox Group has stated that it likely violated two financial covenants under its bank agreements as of Dec. 30, the agency noted.
The weaker-than-expected results in the all-important fourth quarter stem from delayed shipments from Department 56's overseas vendors which resulted in order cancellations and higher than normal inventory levels, Moody's added.
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