Houghton Mifflin Harcourt has priced and allocated $380 million aggregate principal amount of five-year senior secured term loans and a $250 million five-year senior secured asset-based revolving credit facility.
According to a related 8-K filing, Citibank is serving as administrative agent for both the term loan and the ABL.
The revolving credit facility is subject to earlier maturity if the senior secured term loans have not been refinanced in full 91 days prior to such maturity date. The new senior secured term loans will be sold to investors at a price of 96% of the principal amount and will bear interest at a rate of LIBOR plus 6.25%. The closing of these loan transactions is expected to occur on November 22, 2019, subject to customary closing conditions.
“The company’s recent capital markets activities will enable us to have an improved balance sheet and a significantly extended maturity profile,” said Jack Lynch, president and CEO of Houghton Mifflin Harcourt. “After the closing of the financing, HMH will have a lower gross debt level – an important first step in de-levering our balance sheet. The prepayment terms in this new capital structure will provide us the strategic flexibility to invest in growth, execute our strategy and generate greater free cash flow at all points in our business cycle.”
The company intends to use the proceeds of the senior secured term loans, together with the net proceeds from the issuance of senior secured notes separately announced today and cash on hand of approximately $114 million, to repay approximately $766 million in borrowings under its existing term loan facility and pay fees and expenses related to the refinancing transactions.
Houghton Mifflin Harcourt is provider of K–12 core curriculum, supplemental and intervention solutions and professional learning services.