McGraw-Hill Education talks $250 million five-year PIK toggle notes at 9½% area; pricing Thursday

By Paul A. Harris

Portland, Ore., Dec. 6 – McGraw-Hill Education, Inc. talked a $250 million offering of senior PIK toggle notes due 2022 (Caa1/CCC+) to yield in the 9½% area, according to a syndicate source.

Books close at noon ET on Thursday, and the Rule 144A and Regulation S deal is set to price thereafter.

Credit Suisse Securities (USA) LLC is the lead bookrunner. Jefferies LLC is the joint bookrunner. Apollo is the co-manager.

The first interest payment will be made in cash. Subsequent payments may either be cash, or 50% cash and 50% additional notes, or 100% additional notes.

The notes become callable after one year at 102, with the call premium declining to 101 after two years and to par after three years.

The notes feature an equity clawback at 102 in year one, with the premium declining to 101 in year two and to par in year three.

The issuing entities are special purpose vehicles MHGE Parent, LLC and MHGE Parent Finance, Inc.

The New York-based provider of education materials plans to use the proceed to refinance the MHGE HoldCo notes.

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