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TEXT-Fitch cuts Houghton Mifflin Harcourt's IDR to 'C'
2012年5月11日 / 晚上6点38分 / 6 年前

TEXT-Fitch cuts Houghton Mifflin Harcourt's IDR to 'C'

May 11 - Fitch Ratings has downgraded the Issuer Default Rating (IDR) of
Houghton Mifflin Harcourt Publishers Inc. (HMH) and its subsidiaries to 'C' from
'CC'. There is no assigned Rating Outlook. A full rating list is shown below.
The downgrade impacts $3.1 billion in debt.	
The downgrade reflects HMH's announcement of its restructuring plan to swap its
$3.1 billion in debt for equity. The company has obtained support from
approximately 70% of the lending group (secured bank facilities and secured
notes). In addition, HMH has obtained a $500 million financing commitment, which
will provide sufficient liquidity to support seasonal working capital swings. As
proposed, the current equity holders will receive warrants excisable for up to
5% of the company's equity.	
Upon filing of the prepackaged bankruptcy, Fitch will downgrade the IDR to 'D'.	
The restructuring will materially reduce leverage and cash interest burdens.
This will provide HMH with additional flexibility to invest in its operations.	
HMH continues to be a leader in the K-12 educational material and services
sector, capturing 41% of 2011 market share (adoption and open territory market
[excluding Advanced Placement Sales] - based on Association of American
Publishers (AAP) and company data). Fitch believes investments made into digital
products and services will position HMH to take a meaningful share of the
rebound in the K-12 educational market. Fitch's expects HMH will be able to, at
a minimum, defend its market share.	
Fitch expects revenues to continue to decline in the low to mid single digits in
2012. The education business is in a cyclical trough, and Fitch believes that
HMH and its peers will benefit from the adoption of common core standards in
2014/2015 which will fuel revenue growth.	
HMH Publishers' Recovery Ratings reflect Fitch's expectation that the enterprise
value of the company, and hence recovery rates for its creditors, will be
maximized in a restructuring scenario (going-concern) rather than liquidation.
Fitch estimates an adjusted, distressed enterprise valuation of $1.4 billion
using a 6 times (x) multiple. The 'RR4' Recovery Ratings for the secured debt
issues represent an expected recovery in the range of Fitch's 31% to 50% range.	
Fitch has downgraded the following ratings:	
HMH Publishers	
--IDR to 'C' from 'CC';	
--Secured first lien credit facility to 'C'/RR4 from 'CC'/RR4;	
--Senior secured first lien notes to 'C'/RR4 from 'CC/RR4'.	
Houghton Mifflin Harcourt Publishing Company	
--IDR to 'C' from 'CC'.	
HMH Publishers LLC	
--IDR to 'C' from 'CC'.	
Primary Analyst	
Rolando Larrondo	
Fitch, Inc.	
One State Street Plaza	
New York, NY 10004	
Secondary Analyst	
Shawn Gannon	
Associate Director	
Committee Chairperson	
Mike Simonton, CFA	
Managing Director	
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email:	
Additional information is available at ''. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
Applicable Criteria & Related Research:	
--'Corporate Rating Methodology' (Aug. 12, 2011).	
Applicable Criteria and Related Research:	
Corporate Rating Methodology

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