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Moody’s changes Sleepy’s view to negative
Moody's Investors Service said it changed HMK Mattress Holdings, LLC's (Sleepy's) outlook to negative from stable.
The company's B3 corporate family rating, B3-PD probability of default rating and B2 rating of the senior secured term loan were affirmed.
Moody’s said the outlook change reflects the risk that the company' liquidity may weaken and lease-adjusted leverage may remain over 7 times in the near-term.
During the first quarter of 2014, Sleepy's EBITDA declined significantly, resulting in a tighter than historical high-teens leverage covenant cushion. The company's results have been hurt by one-time factors (severe winter weather particularly in Sleepy's core regions, line-up changes, and the run-out of an unsuccessful advertising campaign), as well as a mix shift toward lower-end mattresses, sluggish traffic and intense competitive pressures, the agency said.
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