Cengage Learning plan confirmed; emergence expected in next few weeks

By Caroline Salls

Pittsburgh, March 13 - Cengage Learning, Inc.'s plan of reorganization was confirmed on March 13 by the U.S. Bankruptcy Court for the Eastern District of New York, according to a company news release.

Cengage said the plan received full support from all of its major stakeholders, and the confirmation clears the way for the company to emerge from its court-supervised financial restructuring within the next few weeks.

"We have used this process to establish a new capital structure with a substantially stronger balance sheet," chief executive officer Michael Hansen said in the release.

"We expect to emerge as an even more competitive and well-capitalized company, with excellent liquidity and greater financial flexibility to accelerate our growth and continue to meet the evolving needs of our users and customers."

Under the plan, which resulted from a global settlement announced in February with the company's major financial stakeholders and creditors, Cengage will reduce its funded debt by more than $4 billion and secure $1.75 billion in new financing.

As previously reported, Cengage's amended plan incorporates the global settlement with holders of a super-majority of its first-lien, second-lien and unsecured debt, its existing primary equityholder and the official committee of unsecured creditors.

Under the plan, current first-lien lenders will receive a substantial majority of the equity of the reorganized company, and second-lien creditors and senior noteholders will share in cash and stock.

Unsecured creditors will receive a share of cash or stock, at their election.

Holders of second-lien claims, senior notes claims, PIK notes claims and general unsecured claims other than Apax Partners, LP will also receive amounts from a withheld Apax distribution.

The withheld Apax distribution will equal $12 million of cash plus the amount of any withheld distribution gross-up.

To the extent not otherwise transferred to reorganized Cengage, Cengage Learning interests will be reinstated on the plan effective date.

Cengage, a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets, filed for bankruptcy on July 2. The Chapter 11 case number is 13-44106.

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