Sports Authority is working to stave off bankruptcy after missing a key $20 million interest payment to bondholders last week.

The sporting goods retailer, which has at least $643 million in debt, entered a 30-day grace period on Jan. 15 during which it can negotiate a deal with lenders to avoid defaulting on its debt.

Moody’s Investors Service on Wednesday downgraded Sports Authority two steps on its debt rating scale, saying there is a “high probability of default that could arise from [the] missed interest payment” and that the company “may have difficulty refinancing its debt without restructuring or impairment to lenders.”

Sports Authority said last week it had agreed with lenders not to make a $20 million interest payment on its subordinated notes.

“Although Sports Authority currently has sufficient liquidity to conduct its business operations and to make the current interest payment on the subordinated mezzanine debt, after consultation with our senior lenders we elected not to make the interest payment while we continue these discussions,” the company said in a statement.

Sports Authority was acquired in 2006 for $1.3 billion by a group led by private equity firm Leonard Green & Partners. Bloomberg said it has struggled to keep up with competition from old rivals such as Dick’s Sporting Goods as well as newer entrants like Lululemon Athletica, Gap’s Athleta, and even Amazon.com.

“According to analysts, Dick’s has been doing what Sports Authority should have done: expanding online and with new locations,” Bloomberg reported.

The company has been working to improve operational performance through store re-models, improved product stock levels and e-commerce initiatives.

But Moody’s said sales “have once again turned negative due to store closures and weak comparable store sales, while EBITDA margins have been pressured by expense deleveraging, lower merchandise margins and higher shipping costs related to growing e-commerce sales.”

Sports Authority has 450 stores and generated $2.6 billion in revenue for the year ending Oct. 31. Dick’s is now the largest sporting-goods chain, with $6.8 billion in revenue in fiscal 2015 and 645 stores.

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