Moody's rates Interactive Health

Moody's Investors Service said it assigned B2 senior implied rating to Interactive Health LLC and a B2 rating to the company's proposed $80 million senior notes due 2011 along with a speculative grade liquidity rating of SGL-3.

The outlook is stable.

The company will be issuing $80 million of senior notes. The proceeds of the new issuance will be used to repay $56.8 million senior subordinated notes, to make a $19.1 million distribution to shareholders, and to pay related fees and expenses.

Moody's said the rating reflects the company's very small scale especially when compared to its competitors (Panasonic), significant customer concentrations, manufacturing reliance on one overseas vendor for its main massage chair product line, the short track record of the new management team, as well as the risks and opportunities presented with new sales channels and the forecasted rapid growth.

The rating also considers the company's low-cost flexible operations, strong leverage and coverage ratios for the rating category, and the company's dominant 89% market share. In addition, the rating takes into account the favorable market trends, the growing recognition of massage benefits, and the potentially under penetrated U.S. market.

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