Moody's rates Cengage loans B2

Moody's Investors Service said it assigned B2 ratings to Cengage Learning Acquisitions, Inc.'s proposed senior secured extended term loan due July 2017 and $300 million senior secured extended revolver due March 2017.

The B3 corporate family rating, SGL-3 speculative-grade liquidity rating, other debt instrument ratings and stable outlook are not affected.

Cengage intends to use the net proceeds from a new first-lien debt offering to fund a 30% paydown of lenders choosing to extend their portion of the company's current $3.9 billion term loan due July 2014.

Moody's said the significant increase in cash interest expense resulting from the proposed transactions weakens free cash flow generation and will pressure the company's ability to address the refinancing risk associated with its remaining 2014/2015 maturities.

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