Pass the hat for HMRiverdeep, the hard-pressed, whale-swallowing minnow of an educational publisher. They're in need of cash to cover the cost of all those many acquisitions.
You'll need a rather large hat, something bigger than a ten-gallon Stetson. Perhaps it would be better to pass around one of those enormous fish tanks that are so popular in hotel lobbies, with their thousands of gallons of capacity.
The first pass would have to net $4.95 billion to cover the first-lien term loan. Then you'd want to wheel your mighty fish tank around once more to pick up enough spare change to cover the $1.7 billion second-lien loan. Finally, it's one more dip in the money well to cover the $500 million revolving loan.
Keep in mind that this is in addition to the $250 million revolver, the $1.57 billion term loan B and the $2.1 billion add-on term loan B, all of which was needed to finance Riverdeep's acquisition of Houghton Mifflin.
Credit Suisse will be presenting the particulars in Barcelona on Tuesday, and then they'll pass their giant fish tank around the financial offices in London and New York at the beginning of November. Once that's done and the money's in hand, Harcourt Education, Harcourt Trade, and the Greenwood-Heinemann division of Reed Elsevier will be swallowed up by the former minnow that has grown to be a whale.
Financial gurus will take note that the pricing on the first-lien term and the revolver is set at 375 basis points over LIBOR. The rest of us will scratch our heads and wonder how Barry O'Callaghan will generate enough profits from his newly grown whale to pay for all that borrowing.
2 comments:
According to Reuters the total will be $7.15 billion. That must cover last year's debt plus the new debt being taken on for the Harcourt purchases. What with all the presentations happening this week, should we expect that the deal will be sealed by year's end if not sooner?
Pending approval by the anti-monopoly czars in Washington DC, I'd say it's a done deal if the financing comes through.
Then it's up to the employees to work their ink-stained fingers to the bone to sell, sell, sell. That would be the employees who haven't been given the sack in a cost-cutting move, of course.
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