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Houghton Mifflin to launch $1.48 billion term loan on Wednesday
By Sara Rosenberg
New York, March 22 – Houghton Mifflin Harcourt Co. will hold a lender call at 11 a.m. ET on Wednesday to launch its proposed $1.48 billion seven-year first-lien term loan, according to a market source.
BofA Securities Inc., JPMorgan Chase Bank, Deutsche Bank Securities Inc., Macquarie Capital (USA) Inc., Citizens Bank, Goldman Sachs Bank USA and Mizuho are the joint lead arrangers and bookrunners on the first-lien debt.
The first-lien term loan has 101 soft call protection for six months, the source said.
The company is also getting a $390 million eight-year second-lien term loan that has been privately placed.
JPMorgan, BofA Securities, Deutsche Bank and Macquarie are the lead arrangers and bookrunners on the second-lien debt.
Based on the commitment letter, the company is also expected to get an up to $250 million five-year revolver.
The commitment letter outlined pricing on the revolver as 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 as 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 as expected at SOFR plus 800 bps with a 0.5% floor.
In addition, the commitment letter had second-lien term loan call protection as 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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