Houghton Mifflin files for Chapter 11 bankruptcy protection
Textbooks on a shelf at Quantumbooks in Boston, Mass., on Aug. 16, 2005.
NEW YORK – Houghton Mifflin Harcourt Publishers Inc., the 180-year-old publisher of textbooks and literature like “The Lord of the Rings” trilogy, filed for Chapter 11 bankruptcy protection today, Bloomberg News reported.
Houghton Mifflin and two dozen of its affiliates filed for bankruptcy in Manhattan after agreeing to a deal with creditors that would rid the company of $3.1 billion of debt, Reuters reported.
According to Bloomberg News:
Under the proposed recovery plan, Houghton's long-term bank loan and bond debt would convert to all of the equity in the reorganized company, according to a May 11 statement. Existing shareholders would receive warrants for 5 percent of the new stock if they voted in favor of the plan.
The reorganization should cut $250 million in annual cash interest costs for Boston-based Houghton Mifflin, Reuters reported.
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Houghton Mifflin lost $2.18 billion last year, including a $1.67 billion writedown, as sales fell, Reuters reported.
"The global financial crisis over the past several years has negatively affected" Houghton Mifflin's financial performance, William Bayers, company general counsel, explained in the filing, according to Bloomberg News. That’s a business that "depends largely on state and local funding" for the schoolbook market, he noted.
Ninety percent of the company’s revenue is generated through the sales of textbooks and educational services, Reuters reported.
The company expects to emerge from bankruptcy by June 30, according to Reuters.
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