Moody's: Simmons outlook negative

Moody's Investors Service said it revised Simmons Co.'s outlook to negative and affirmed its corporate family and probability-of-default ratings at B2, its $75 million senior secured revolver due 2011 and $492 million senior secured term due 2011 at Ba2 (LGD2), its $200 million senior subordinated notes due 2014 at B2 (LGD4), its $269 million senior discount notes due 2014 at B3 (LGD5) and its $300 million Super Holdco Toggle loan at Caa1 (LGD6, 91%).

The agency also revised the loss-given-default rate assigned to the credit facilities to 18% from 20%, the rate assigned to the subordinated notes to 53% from 57% and the rate assigned to the discount notes to 74% from 75%.

The outlook change follows concerns that the company will face a period of limited cushion in its financial covenants due to the combination of soft discretionary consumer spending, increased raw material costs, abnormally high costs incurred last year with the relaunch of its Beautyrest product line and a contractual revision of its bank covenants in the first quarter, Moody's said.

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