HOUGHTON MIFFLIN Harcourt is looking to iPad games, ecommerce sales to parents and partnerships with technology companies to diversify the restructured educational publisher in the hope of taking it public within two years.
The Boston-based group, built from two leveraged deals during the credit bubble, emerged 10 days ago from a month-long Chapter 11 bankruptcy reorganisation – its second restructuring – with $3.1 billion of its debt converted to equity.
The company was founded when Barry O’Callaghan’s electronic publishing business Riverdeep completed a $5 billion reverse takeover of Houghton Mifflin in 2006. He left the business in March last year following the first restructuring of the group in 2010, which saw many Irish investors wiped out and the value of Mr O’Callaghan’s $1 billion stake decimated.
Linda Zecher, chief executive since September, said that lenders led by Paulson and Co had agreed to a five-year plan and she hoped to pursue an initial public offering “over the next 18-24 months”.
The restructuring would allow HMH to move faster into areas adjacent to its core textbook business, Ms Zecher said. The past debt burden on HMH “definitely had a negative impact on the company” by preventing it from making certain acquisitions, she said, but it could now look again at deals.
Apple’s entry into interactive textbooks this year has highlighted the rapid adoption of technology in classrooms.
Ms Zecher, a former Microsoft executive, said the digital learning transition would take time, adding that it would still print textbooks until broadband became more widely available and tablets became cheaper because “we can’t get ahead of our customer”.
HMH would also strike partnerships with technology companies including Apple.– (Copyright The Financial Times Limited 2012)
