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Houghton Mifflin prioritizes debt reduction to access debt markets
By Devika Patel
Knoxville, Tenn., Feb. 28 – Houghton Mifflin Harcourt Co. has not had access to the debt markets for the last couple of years, and management wants to change that.
“We are shifting our capital deployment priorities to place a greater emphasis on deleveraging our balance sheet,” president and chief executive officer John Lynch said Thursday on the company’s earnings conference call for the fourth quarter and year ended Dec. 31.
“We want to assign a priority to deleveraging the balance sheet.
“The reason we want to focus on that is we want to have access to debt markets at any point in our business cycle and, if you look at the last couple of years, we just didn’t have access to the debt markets, so it’s now a capital allocation priority to deleverage.”
As of Dec. 31, the company had about $772 million outstanding under its term loan due May 29, 2021 and no borrowings outstanding under its revolving credit facility.
“We expect to refinance all or a portion of our outstanding debt prior to maturity. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing may not be as favorable as the terms of our existing debt,” the company warned in its latest 10-K filing with the Securities and Exchange Commission.
Adjusted EBITDA for the fourth quarter of 2018 was $2 million, an increase of $12 million from negative $10 million in the same quarter of 2017.
As of Dec. 31, the company had $303 million of cash and cash equivalents and short-term investments, compared with $235 million as of Dec. 31, 2017.
Houghton Mifflin Harcourt is a Boston-based educational publisher in the K-12 market.
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