Riverdeep begins tender offer for four series of notes

By Angela McDaniels

Seattle, Nov. 29 - Riverdeep Holdings Ltd. began a tender offer and consent solicitation for its €300 million principal amount of 9¼% senior notes due 2011 on Wednesday, according to a company news release.

Riverdeep Interactive Learning USA, Inc. began a concurrent tender offer and consent solicitation for the $600 million outstanding 8¼% senior notes due 2011, $400 million outstanding 9 7/8% senior subordinated notes due 2013 and $265 million 11½% senior discount notes due 2013 issued by Houghton Mifflin Co. and HM Publishing Corp.

Riverdeep Holdings' tender offer expires at 11 a.m. ET on Dec. 28, and Riverdeep Interactive's tender offer expires at 5 p.m. ET on Dec. 28

The tender consideration will be determined using the yield to the first call date, which is equal to the sum of the yield to maturity of the reference security based on the bidside price for the reference security on Dec. 13 plus 50 basis points and minus €30 per €1,000 principal amount of notes and $30 per $1,000 principal amount of notes.

The reference security for the 9¼% notes is the 2.5% BKO (Bundesschatzanweisungen) due March 23, 2007. The reference securities for the 8¼%, 9 7/8% and 11½% notes are the 3 3/8% U.S. Treasury Notes due Feb. 28, 2007, the 4 5/8% U.S. Treasury Note due Feb. 28, 2008 and the 4 7/8% U.S. Treasury Notes due Oct. 31, 2008, respectively.

Noteholders will also receive accrued interest up to but excluding the payment date. Riverdeep Holdings noteholders who tender by Dec. 13 will receive payment on Dec. 14. The payment date for all other noteholders is Dec. 29.

The tender consideration will include a consent fee of €30 per €1,000 principal amount of notes for Riverdeep Holdings noteholders who tender by 11 a.m. ET on Dec. 12 and a $30 per $1,000 principal amount of notes for Riverdeep Interactive noteholders who tender by 5 p.m. ET on Dec. 12.

Holders who tender must also deliver consents to the proposed amendments which, among other things, eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture governing the notes.

Credit Suisse Securities (Europe) Ltd. (+4420 7883 6748) is dealer manager and solicitation agent for Riverdeep Holdings, and Deutsche Bank AG, London (+4420 7547 5000) is the tender agent.

Credit Suisse Securities (USA) LCC (800 820-1653 or 212 325-7596) is the dealer manager and solicitation agent for Riverdeep Interactive, and D.F. King & Co. Inc. (800 769-7666) is the tender agent.

The tender offers are being held in connection with HM Rivergroup plc's acquisition of Houghton Mifflin Holding Co. Inc. from affiliates of private investment firms Thomas H. Lee Partners, Bain Capital Partners and The Blackstone Group and management for $3.4 billion. Consummation of the tender offer is conditioned upon the closing of the acquisition.

Houghton Mifflin's 7.2% senior notes due 2011 will remain outstanding following the acquisition. All other Riverdeep and Houghton Mifflin debt will be refinanced.

HM Rivergroup expects to complete the acquisition of Houghton Mifflin before the end of 2006. Following closing of the transactions, HM Rivergroup will change its name to Houghton Mifflin Riverdeep Group plc.

Riverdeep is based in Dublin, Ireland, and provides CD-ROM and internet-based courseware and assessment and management tools. It will be acquired by HM Rivergroup concurrent with HM Rivergroup's acquisition of Houghton Mifflin, a Boston-based educational publisher.

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