Publisher seeks relief from debt
Houghton Mifflin Harcourt filed for bankruptcy protection Monday as part of a deal with its creditors to eliminate $3.1 billion in debt, and the Boston-based publishing giant said the restructuring will allow it to invest in new ventures.
Under the terms of the Chapter 11 restructuring, filed in New York bankruptcy court, Houghton’s creditors will exchange their debt holdings for equity ownership stakes in the company. Houghton said Monday it had received backing from the vast majority of its lenders, and Citigroup Global Markets Inc. had also committed $500 million in financing.
The company said it does not expect the restructuring to result in layoffs of its 600 Massachusetts employees in Boston and Wilmington.
The company was created by the combination of Harcourt Education and Houghton Mifflin, which were each bought separately by Barry O’Callaghan, a former Irish investment banker, several years ago for a total of $7.4 billion. O’Callaghan borrowed heavily, and the combined company underwent a similar debt-for-equity swap that eliminated his ownership stakes. He remained chief executive officer until resigning in March 2011. He is no longer affiliated with the company.
The latest plan is intended to free up cash for investment into growing its overseas business and in digital book publishing, said Josef Blumenfeld, a company spokesman.
“This is probably a regrettable thing to happen to them, but it is probably an enormous opportunity to get back on their feet,” said Kathy Mickey, managing editor for the Education Group at Simba Information, a Stamford, Conn., market research firm. “The emerging markets is where the growth is, and some of the company’s competitors are more active in the global market.”
The combined company is one of the largest publishers of textbooks in the world, and the Houghton Mifflin arm is among the industry’s most venerable names. Its origins date to 1832 in Boston, and among its best-known titles are the “Curious George” books and J.R.R. Tolkien’s “Lord of the Rings.”
O’Callaghan acquired Houghton Mifflin from Boston buyout firms Thomas H. Lee Partners and Bain Capital and a minority partner, Blackstone Group. That sale was the third time in five years that Houghton had a new owner.
Michael B. Farrell can be reached at email@example.com.