Moody's confirms Riverdeep Interactive

Moody's Investors Service said it confirmed Riverdeep Interactive Learning USA, Inc.'s B3 corporate family and probability-of-default ratings following receipt and review of audited financial statements for parent company Riverdeep Holdings Ltd. and Houghton Mifflin Holding Co., Inc. for the fiscal period ended Dec. 21.

The agency also affirmed the company's $250 million first-lien senior secured revolving credit facility and $1.62 billion first-lien senior secured term loan B at Ba3 (LGD2) and changed the loss-given-default rate assigned to the loans to 22% from 26%.

This conclude the review for possible downgrade begun on Feb. 22 following the announcement that Riverdeep Holdings' auditors had resigned, and the outlook is negative.

The negative outlook reflects Moody's concerns regarding the company's reported 2006 EBITDA, which fell short of expectations; its ability to deliver the level of synergies currently expected during 2007; and the possibility that management may engage in further acquisition activity.

The agency said the upgrade of Riverdeep's senior secured ratings is the result of the company's announcement that it has postponed a proposed $250 million add-on senior secured facility until completion of the 2006 audited financial statements.

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