Houghton Mifflin firms $1.48 billion term loan at SOFR plus 525 bps

By Sara Rosenberg

New York, April 4 – Houghton Mifflin Harcourt Co. finalized pricing on its $1.48 billion seven-year first-lien term loan (B2/B-/B+) at SOFR+10 basis points CSA plus 525 bps, the high end of the 500 bps to 525 bps talk, according to a market source.

Also, the company set the original issue discount on the term loan at 97, the wide end of the 97 to 97.5 talk, and extended the 101 soft call protection to one year from six months, the source said.

In addition, some documentation changes were made, including revising MFN to 50 bps for 24 months from 100 bps for six months and changing carve-outs, modifying incremental capacity, adding Serta protection and adding quarterly lender calls.

The term loan still has a 0.5% floor.

BofA Securities Inc., JPMorgan Chase Bank, Deutsche Bank Securities Inc., Macquarie Capital (USA) Inc., Citizens Bank, Goldman Sachs Bank USA, Mizuho, Blackstone and StonePoint are the joint lead arrangers on the first-lien debt.

The company’s $2.12 billion of senior secured credit facilities also include a $250 million five-year revolver (B2/B-/B+) and a $390 million privately placed eight-year second-lien term loan.

JPMorgan is the left lead on the second-lien term loan.

Proceeds will be used with equity to 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.

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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