Moody's affirms Educate

Moody's Investors Service said it affirmed the ratings of Educate, Inc. and those of its subsidiary, Educate Operating Co. LLC.

The outlook is stable.

The affirmation follows amendments to the company's existing senior secured credit facilities as of March 31, which included an increase in the term loan B of about $20 million to repay outstanding revolver debt and related expenses.

Moody's said the affirmation also follows weakness in cash-flow generation in recent quarters, resulting from acquisition and integration costs, losses in Education Station, which is for sale, and the impact of Hurricane Katrina.

The ratings primarily reflect the company's moderate leverage for the rating category, counterbalanced by significant rent expense, the recent weakness in operating cash flow generation and competitive business, the agency said.

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