Moody's reviews Empire Today

Moody's Investors Service said it placed Empire Today LLC's Caa1 corporate family rating, its Caa1-PD probability of default rating and the Caa1 (LGD4, 52%, adjusted from 51%) rating of its $150 million senior secured notes on review for downgrade due to the delay in the issuance of the company's financial statements for the three months and six months ended June 30.

The delay was prompted by a lawsuit filed against Empire, two of its third-party installers and a business entity beneficially owned by Empire's chief executive officer and former chief financial officer or their entities or trusts. Empire is reviewing the circumstances surrounding the lawsuit, the role of the current CEO and former CFO in the transaction cited in the lawsuit and some of its internal processes and expects to issue the second-quarter financial statements within 30 days.

The agency said its review will focus on the company's second-quarter financial results and operating performance, the impact of the lawsuit, governance issues and the company's internal review of its processes and any impact this might have on the company's financial profile.

Empire's Caa1 corporate family rating continues to reflect its very small scale, its weak credit metrics, the discretionary nature of the company's products and its very high susceptibility to consumer confidence and macroeconomic factors, Moody's said.

Ratings are supported by the good position Empire has established in the highly fragmented floor covering market and in the shop-at-home segment of that market, in particular, the agency said.

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