Moody's rates Educate facility

Moody's Investors Service said it has assigned a B1 rating to Educate Operating Co. LLC's proposed $190 million senior secured credit facility that will be used to refinance existing debt.

Specifically, Moody's assigned a B1 rating to the $20 million senior secured revolver due 2009 and $170 million senior secured term loan due 2011. Moody's confirmed the B1 senior implied rating and the B2 senior unsecured issuer rating.

Moody's said the ratings primarily reflect the company's high leverage, significant rent expense, and competitive business. The ratings also consider the company's strong market share, low maintenance capital expenditures, high product demand, and sound reputation.

Proceeds from the proposed transaction will be used to refinance about $108.5 million outstanding on the existing senior secured term loan, $60 million Holdco (Educate Inc.) seller notes, and for general corporate purposes. The company is also replacing its $20 million undrawn senior secured credit facility with the new $20 million senior secured revolving credit facility that matures in 2009.

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