S&P upgrades Harry & David

Standard & Poor's said it raised its unsolicited corporate credit rating on Harry & David Operations Corp. to CCC from CC, along with its $175 million senior fixed-rate notes and $70 million senior floating-rate notes to CCC- from C with a recovery rating of 5, indicating an expectation of 10% to 30% recovery of principal in the event of default.

The outlook is developing.

The downgrade reflects, among other things, a view of marginally better liquidity for Harry & David at the end of its second quarter that ended Dec. 26, 2009, S&P said.

Amid difficult retail conditions, the company ended its second quarter with $108.5 million of cash versus $95.2 million at the same time a year ago, the agency said.

Still, Harry & David's liquidity position is weak, given the high seasonality of the company's operations, S&P said.

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