Moody's rates Haights Cross discount notes Caa2

Moody's Investors Service said it assigned ratings to Haights Cross Operating Co., including a Caa2 rating to Haights Cross Communications Inc.'s proposed $74 million proceeds senior discount notes due 2011. Moody's also confirmed the ratings of Haights Cross Operating Co.'s $30 million senior secured credit facilities due 2008 at B2, $100 million second priority senior secured floating-rate notes due 2008 at B3, and $140 million 11¾% senior notes due 2011 at Caa1.

The outlook is stable.

Moody's said the ratings reflect the company's high leverage, cash flow restraint caused by flat top line growth, and competition within the educational and library publishing and audio book sectors.

The ratings are supported by the publisher's diversified business base and recurring sales profile (especially of its backlist sales) that have helped to partially buffer Haights Cross from the full impact of the recent sales slowdown experienced by the educational publishing sector.

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