Riverdeep’s $3.5bn (£1.8bn) reverse takeover of Houghton Mifflin may cost it more if Moodys cut Riverdeep’s credit rating. Moodys review was prompted by the resignation of Ernst & Young as the company’s auditors.

Riverdeep have been quoted as saying the resignation of their auditors would only lead to an ‘immaterial’ restatement of its accounts. This is hardly going to help them bid for Harcourt if their credit rating for their $1.62bn (£838m) of senior secured loan is cut from B1, nor will it help with their debt financing for the HM deal with Citigroup and Credit Suisse. The re-rating will not happen until

Moodys get Riverdeep’s audited financial statements at the end of March.

When Ernst & Young resigned the Riverdeep account on January 31, the document they filed with the Irish Companies Regulation Office gave the reason, ‘as a result of incorrect representations made to us by the Company's parent in respect of a material contract’. We wonder what the clients of Irish stockbroker Davey and the Saudi investment company Obeikan, who put £104m in cash into the Riverdeep deal, think of Ernst & Young’s departure?

www.davet.ie

www.ey.com

www.obeikan.com

www.riverdeep.com