Houghton Mifflin to launch $7.15 billion credit facility on Nov. 5

By Sara Rosenberg

New York, Oct. 29 - Houghton Mifflin Co. is scheduled to hold a bank meeting in New York on Nov. 5 to launch its proposed $7.15 billion credit facility, according to a market source.

In addition, a bank meeting will be held on Thursday in London for the deal, and a presentation will be made on Tuesday in Barcelona at Credit Suisse's leveraged finance conference.

Credit Suisse, Lehman Brothers and Citigroup are the lead banks on the deal.

The facility consists of a $500 million six-year revolver talked at Libor plus 375 basis points, a $4.95 billion 61/2-year first-lien term loan talked at Libor plus 375 bps and a $1.7 billion seven-year second-lien term loan, the source said.

The first-lien term loan carries call protection of 103 in year one, 102 in year two and 101 in year three, and the second-lien term loan is non-callable for 18 months, then at 104 for a year, at 102 for a year and at par thereafter.

Proceeds will be used to help fund the acquisition of the Harcourt Education, Harcourt Trade and Greenwood-Heinemann divisions of Reed Elsevier for $4 billion, consisting of $3.7 billion in cash and $300 million of common stock of Houghton Mifflin Riverdeep Group plc, Houghton's parent company.

Existing investors, including J & E Davy, have committed to provide $235 million of new equity financing to support the transaction.

Through the acquisition, Boston-based Houghton Mifflin said it will be a preeminent educational publisher well-positioned to meet the evolving needs of educators and students.

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