Houghton Mifflin Harcourt to Restructure $3.1 Billion in Debt

By Jason Boog Comment

Houghton Mifflin Harcourt hopes to mount “comprehensive financial restructuring plan” to redistribute the company’s $3.1 billion in debt. The plan includes “a prompt, court-supervised, chapter 11 process.”

Here’s more from the company: “If approved by the requisite percentages and implemented as proposed, HMH will eliminate $3.1 billion of debt and reduce current annual cash interest costs by approximately $250 million … To facilitate these important changes to HMH’s capital structure, in the near future the Company plans to utilize a ‘pre-packaged’ plan of reorganization that will be implemented through a prompt, court-supervised, chapter 11 process. This will have no impact on the Company’s day-to-day operations.”

The move would redistribute “bank and bond debt into 100% of the equity” in the restructured publisher. Citigroup Global Markets has already made a commitment for $500 million in financing to help the company redistribute its debt.

According to the company, “more than 70% of its senior secured lenders and bondholders” have already agreed to the plan. The company still seeks the support of “broader lender, bondholder and shareholder constituencies” in this move.

The Wall Street Journal has more about the restructuring. Check it out: “Houghton has struggled amid budget cuts by state and local governments that buy the company’s K-12 textbooks, according to ratings firm Moody’s Investors Service. That market, which Houghton relies on for the bulk of its revenue, has fallen 48% over the past four years, Moody’s said.”