Houghton Mifflin $1.7 billion second-lien term loan guided in Libor plus 850 bps area

By Sara Rosenberg

New York, Oct. 30 - Houghton Mifflin Co.'s (Education Media & Publishing) $1.7 billion seven-year second-lien term loan is being talked in the Libor plus 850 basis points area, according to a market source.

As was previously reported, the second-lien loan is part of a $7.15 billion credit facility that also includes a $500 million six-year revolver talked at Libor plus 375 bps and a $4.95 billion 61/2-year first-lien term loan talked at Libor plus 375 bps.

The first-lien term loan will be offered to investors with an original issue discount in the 99 area, the source added.

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.

A bank meeting to launch the credit facility will take place in New York on Monday.

In addition, a bank meeting will be held this Thursday in London for the deal and a presentation was 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.

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.

The company will be renamed Education Media.

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