S&P affirms HM Rivergroup, rates loans B, CCC

Standard & Poor's said it affirmed its B- corporate credit rating on HM Rivergroup plc and subsidiary Riverdeep Interactive Learning USA Inc. and removed the ratings from CreditWatch with positive implications, where they were placed on July 18.

The outlook is stable.

The agency said that the action is based on its expectation that the company's proposed $4.0 billion, predominantly debt-financed acquisition of the Harcourt educational publishing business from Reed Elsevier plc, specifically its financing structure and expected synergies, together pose very high ongoing financial risks.

S&P said it also assigned its bank loan and recovery ratings to the $7.15 billion senior secured credit facilities of Riverdeep Interactive Learning, adding that the senior secured first-priority bank loan, which consists of a $500 million revolving credit facility due 2013 and a $4.95 billion term loan B due 2014, is rated B with a recovery rating of 2.

The second-lien bank loan, which consists of a $600 million tranche A term loan due 2014 and a $1.1 billion tranche B delayed-draw term loan due 2014, is rated CCC with a recovery rating of 6, the agency said.

According to the agency, the ratings on HM Rivergroup reflect heightened financial risk resulting from the leveraged acquisition of Harcourt, minimally offset by the company's good business positions in the educational publishing industry.

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