McGraw-Hill downsizes to $1 billion, talks eight-year secured notes to yield 9¾%-10%

By Paul A. Harris

Portland, Ore., March 14 - McGraw-Hill Global Education Holdings downsized its offering of eight-year first-lien senior secured notes (B2//BB) to $1 billion from $1.05 billion, while upsizing its term by $50 million, a syndicate source said on Thursday.

The notes are talked to yield 9¾% to 10%.

Books close at noon ET on Friday, and the notes are set to price thereafter.

Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, BMO Securities, Jefferies & Co., Nomura and UBS Investment Bank are the joint bookrunners.

The Rule 144A with registration rights notes become callable in three years at par plus 75% of the coupon. A special call provision allows the issuer to redeem up 10% of the notes annually at 103 during the non-call period.

The notes also feature a three-year 35% equity clawback and a 101% poison put.

Proceeds will be used to fund the leveraged buyout by Apollo Management.

The prospective issuer is a New York-based digital learning company.

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