Princeton Review plans $80 million debt for Penn Foster purchase

By Sara Rosenberg

New York, Oct. 19 - The Princeton Review Inc. is planning to obtain up to $80 million of new senior debt to help fund its acquisition of Penn Foster Education Group Inc. from the Wicks Group of Cos. LLC, company officials said in a conference call on Monday.

Other financing for the $170 million cash acquisition will come from $75 million of new junior securities and $30 million of additional convertible equity, officials said.

Pricing on the new debt will contain a combination of cash and PIK.

Coupons on the senior and junior debt are expected to range from Libor plus 600 basis points to up to 17% to 20%, depending on the tranches of securities, officials added in the call.

On a pro-forma combined basis, Princeton Review would have reported revenues of $238 million for the 12-month period from July 1, 2008 to June 30, 2009. For the calendar year 2008, Princeton Review reported revenues of about $139 million, while Penn Foster had about $90 million in revenues in the same period.

Closing is expected by the end of November, subject to customary regulatory approvals, including expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other conditions.

Princeton Review is a Framingham, Mass.-based provider of college and graduate school test preparation and private tutoring. Penn Foster is a Scranton, Pa.-based provider of online education.

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