Moody's may cut Home Interiors

Moody's Investors Service said it placed the debt ratings of Home Interiors and Gifts on review for possible downgrade following deterioration in the company's operating results, which has weakened its financial condition and heightened its exposure to a challenging operating environment going forward.

On review for downgrade are the B2 senior implied rating; the $50 million five-year senior secured revolving credit facility due March 31, 2009 at B2; the $317.5 million seven-year senior secured term loan facility due March 31, 2011 at B2; the $149.1 million senior subordinated notes due June 1, 2008 at Caa1; and the senior unsecured issuer rating at B3.

Moody's said sales have not been materializing in the expected amounts largely due to the negative impacts of various macro-economic factors on its discretionary products and due to a growing but less productive consultant base.

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