Riverdeep accepts tenders for $1.25 billion combined for several notes series

By Jennifer Chiou

New York, Jan. 9 - Riverdeep Holdings Ltd. and Riverdeep Interactive Learning USA, Inc. said that they accepted tenders from holders of a total of $1,254,503,950 of their notes.

The offers ended on Jan. 8 at 11 a.m. ET for Riverdeep Holdings and 5 p.m. ET for Riverdeep Interactive.

The deadline was previously extended from Dec. 28.

The companies previously received sufficient consents to amend the indentures governing their notes to eliminate substantially all of the restrictive covenants and certain events of default.

At the consent deadline on Dec. 12, Riverdeep Holdings previously said it had received tenders and consents for €295.538 million or 98.5% of its €300 million of 9¼% senior notes due 2011 and Riverdeep Interactive had received tenders and consents for $1.254 billion or 99.1% of its notes.

Specifically, Riverdeep Interactive received tenders and consents for $590.495 million of its $600 million outstanding 8¼% senior notes due 2011, $399.454 million of its $400 million outstanding 9 7/8% senior subordinated notes due 2013 and $264.314 million of the $265 million 11½% senior discount notes due 2013 issued by Houghton Mifflin Co. and HM Publishing Corp.

With the deadline extension, the company said it received tenders for an additional $200,000 of 8¼% notes, $25,325 face value of the 9 7/8% notes of Houghton Mifflin and $15,000 face value of the 11½% notes of HM Publishing.

For each $1,000 principal amount, Riverdeep will pay $1,013.86 for the 8¼% notes, $1,063.99 for the 9 7/8% notes and $932.84 for the 11½% notes.

Jan. 10 is the anticipated payment date.

The tender consideration was determined on Dec. 21 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 bid-side price for the reference security on Dec. 13 plus 50 basis points and minus €30.00 per €1,000 principal amount of notes and $30.00 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 tendered by Dec. 21 will receive payment on Dec. 22.

The tender consideration includes a consent fee of €30.00 per €1,000 principal amount of notes for Riverdeep Holdings noteholders who tendered by 11 a.m. ET on Dec. 12 and a $30.00 per $1,000 principal amount of notes for Riverdeep Interactive noteholders who tendered by 5 p.m. ET on Dec. 12.

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.

As already reported, 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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