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Moody's affirms Riverdeep
Moody's Investors Service said it affirmed Riverdeep Interactive Learning USA, Inc.'s corporate family and probability-of-default ratings at B3, assigned a B1 rating with a loss-given-default assessment of LGD2 (26%) to its $250 million add-on first-lien senior secured term loan B due 2013 and downgraded the company's $250 million first-lien senior secured revolving credit facility due 2012 and $1.62 billion first-lien senior secured term loan B due 2013 to B1 (LGD2, 26%) from Ba3 (LGD2, 21%).
The outlook is stable.
Proceeds from the proposed add-on term loan will be used to refinance $250 million of the company's $1.07 billion subordinated bridge facility, which was issued at the time of the Houghton Mifflin Co. acquisition in December. The company plans to refinance the remaining $820 million subordinated bridge facility within the next three months.
The agency said affirmation of the corporate family rating recognizes that the anticipated refinancing places no additional debt upon Riverdeep. However, the rating continues to reflect the heavy debt burden, high leverage and integration risks the company has incurred in connection with its acquisition of Houghton Mifflin, the high degree of competition encountered from larger and higher-rated rivals in the U.S. basal publishing market and uncertainties concerning Riverdeep's ability to increase publishing and software sales and effect synergies.
The ratings are supported by the merged company's ability to cross-sell a broader range of print and digital basal and supplemental educational products and to capitalize upon a relatively strong 2007-2010 state adoption calendar, Moody's said.
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