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Houghton Mifflin plans $2.12 billion credit facilities for buyout
By Sara Rosenberg
New York, March 7 – Houghton Mifflin Harcourt Co. has received a commitment for $2.12 billion of senior secured credit facilities to help fund its acquisition by Veritas Capital and refinance existing debt, according to a SC TO-T filed Monday with the Securities and Exchange Commission.
The facilities consist of an up to $250 million five-year revolver, a $1.48 billion seven-year covenant-lite first-lien term loan and a $390 million eight-year covenant-lite second-lien term loan.
Based on the commitment letter, pricing on the revolver is expected at SOFR plus 450 basis points with two 25 bps step-downs based on first-lien leverage and a 0% floor, pricing on the first-lien term loan is expected at SOFR plus 450 bps with three 25 bps step-downs based on first-lien leverage and a 0% floor, and pricing on the second-lien term loan is expected at SOFR plus 800 bps with a 0% floor.
The revolver has a commitment fee of 50 bps with step-down to 37.5 bps and 25 bps based on first-lien leverage, the first-lien term loan has 101 soft call protection for six months and amortization of 1% per annum, and the second-lien term loan has call protection of 102 in year one and 101 in year two.
BofA Securities Inc., JPMorgan Chase Bank, Deutsche Bank Securities Inc. and Macquarie Capital (USA) Inc. are the lead arrangers and bookrunners on the debt, with BofA the administrative agent on the first-lien and JPMorgan the agent on the second-lien.
Other funds for the transaction will come from $1.524 billion of equity.
Under the agreement, Houghton Mifflin will be bought for $21 in cash per share through a tender offer. The buyout implies an equity value of about $2.8 billion.
Closing is expected in the second quarter, subject to regulatory approvals and customary conditions.
Houghton Mifflin is a Boston-based learning technology company.
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