Private equity-backed textbook publisher Nelson Education is likely to default on a loan used in its buyout in 2007 within six months.
Standard & Poor’s (S&P) has reduced the company’s credit rating by one notch to CCC-minus, saying that the business has been hit by a decline in government spending on textbooks for school and students’ growing preference for used books.
The company was launched in 2007 when Apax Partners and Omers bought the higher education, career learning and library reference assets of Thomson Learning and Nelson Canada from The Thomson Corporation for $7.75bn.
S&P said Nelson could exceed the leverage limit set by the terms of a loan provided by RBC Capital Markets.
S&P said, “Given the deterioration in the company’s operating performance, very high leverage, and weak liquidity, we believe Nelson will likely default within the next six months.”
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