Riverdeep to pay $400m a year interest
23.07.07 | Philip Jones
Jeremy Dickens, president of HM Riverdeep, the Irish-based company that owns Houghton Mifflin and last week agreed a deal to buy Harcourt Education, has told the Sunday Business Post that the combined business will have to shoulder an interest bill of "more than $400 million a year". However, he said the company was positioned to meet that burden, and also to invest in new products and expanding the business.
He tells the newspaper that the deal was "transformative" for both Riverdeep and the international publishing industry. ‘‘We are now in control of one of the very best publishing companies in the world, and we are absolutely delighted,” he said.
The banks chose not to provide any equity in the deal, leaving that risk to private investors. If HM Riverdeep was highly leveraged before the deal, its debt mountain has risen into the stratosphere, notes the newspaper. Although valued at $11 billion, the enlarged company has debts of $7.4 billion, according to analysts. But Dickens says: "We have planned prudently. The businesses are highly profitable and have a strong cashflow. We have a large revolving credit facility, and we will be taking costs out of the business as a result of the deal. We have a prudent capital structure.”
Dickens said the company’s debt ratio would come down as a result of the deal due to the injection of new equity.
The NYT also asks: Who in the world is Barry O’Callaghan? And why is he turning a small Irish software company into a giant American textbook publisher?