Houghton Mifflin Harcourt, one of the “big three” of education publishers, announced today that it would undergo financial restructuring to manage its sizable debt.
The company agreed with 70 percent of its lenders and bondholders to eliminate $3.1 billion by turning it into equity, and reorganize through a voluntary Chapter 11 bankruptcy process, according to a news release. The process will be complete by the end of June, the company said.
In an email to staff, HMH Chief Executive Officer Linda Zecher stressed that there would be no layoffs or effect on payroll as result of the reorganization. She said there will be no effect on customers or business partners.
“Our plan provides for suppliers and vendors to be paid in full,” the email said.
This is the second restructuring undergone by the company since 2006, when Education Media & Publishing Group Ltd., in Dublin, Ireland (formerly Riverdeep PLC), bought Houghton Mifflin and joined it with Harcourt Education, which it later purchased from Reed Elsevier.
The company is now seeking agreement from the remainder of its creditors and shareholders, who would receive the right to exercise up to 5 percent equity in the company, the news release said.
Not a whole lot of details are available as to how the direction of the company may shift as a result, or to the cause of the restructuring. The textbook market has slowed, though, and major corporations cannot shift as nimbly to adapt to the market as smaller companies.
In her email, Zecher said she is confident the move will improve the long-term health of HMH. It has $135 million in cash on hand and a commitment of $500 million in financing to continue business operations.