Moody's assigns B3 to Houghton Mifflin

Moody's Investors Service said it assigned new ratings to Houghton Mifflin Harcourt Co., including a B3 corporate family rating, a B3-PD Probability of Default Rating, a B2 debt instrument rating to the expected first-lien credit facility consisting of a $1.48 billion first-lien term loan due 2029 and $250 million first-lien revolving credit facility due 2027.

The term loan, a planned unrated $390 million second-lien term loan and $1.27 billion of new equity will be used to fund the $2.8 billion buyout of Houghton Mifflin by private equity firm Veritas Capital. The deal is expected to close in the second quarter of 2022, subject to receipt of regulatory and shareholder approvals and customary closing conditions.

“The rating actions reflect the company's high pro forma debt burden and aggressive financial strategy under new ownership. The buyout will add roughly $1.4 billion of incremental debt to the balance sheet, a nearly sixfold increase in funded debt. It will also reduce cash on hand to $75 million (including a $50 million revolver draw) pro forma for the buyout from $463 million as of Dec. 31, 2021 and increase annual interest expense by approximately $92 million,” Moody’s said in a press release.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.