Brokerage firm Ernst & Young resigned last week as auditors of Riverdeep, the private equity company that recently bought out Houghton Mifflin (and is rumored to be in the running to buy Reed Elsevier). The move may hamper progress on buyouts and in securing further loans to manage additional mergers. “As a result of incorrect representations made to us by the Company’s parent in respect of a material contract, the professional relationship between us and the Company has irretrievably broken down and we have concluded that we cannot continue to act as the Company’s auditors,” Ernst & Young said in a statement.
As a result, Moody’s Investors Service said on Thursday it might cut the ratings on a $1.62 billion senior secured term loan, and withdrew its rating on a $250 million add-on to that loan as the company has decided to postpone the increase.
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