Houghton Mifflin adds three banks to first-lien lead arranger group

By Sara Rosenberg

New York, March 17 – Houghton Mifflin Harcourt Co. amended and restated its debt commitment letter to add Citizens Bank, Goldman Sachs Bank USA and Mizuho as joint lead arrangers and bookrunners on the first-lien debt, according to a SC TO-T/A filed with the Securities and Exchange Commission on Thursday.

The banks are joining previously announced joint leads BofA Securities Inc., JPMorgan Chase Bank, Deutsche Bank Securities Inc. and Macquarie Capital (USA) Inc. on the first-lien debt. BofA is the administrative agent on the first-lien debt.

Joint lead arrangers and bookrunners on the second-lien debt were unchanged as JPMorgan, BofA Securities, Deutsche Bank and Macquarie, with JPMorgan the agent.

As reported earlier, the debt commitment is for $2.12 billion of senior secured credit facilities, comprised 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 0.5% 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.

Proceeds will be used to help fund the buyout of the company by Veritas Capital for $21 in cash per share, which implies an equity value of about $2.8 billion, and to refinance existing debt.

Other funds for the transaction will come from $1.524 billion of equity.

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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