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Houghton Mifflin Harcourt Disputes Credit Rating Downgrade

January 7, 2009
By Michael Cader

Moody’s downgraded Houghton Mifflin Harcourt’s substantial debt in late December, concluding that “shortfalls in HMH’s business plan” and cutbacks in US education budgets would keep the company from bringing its debt down to their target of 9 times ebitda. The agency “estimated that HMH’s debt stood at 10.5 times ebitda at the end of September, and warned of liquidity pressures and ‘a likely default’ under its senior secured loan covenants unless these were amended,” the FT reports.

Additionally, HMH’s parent company Education Media & Publishing “was named as one of the European companies at highest risk of default by Standard & Poor’s,” the rival ratings agency.

HMH tells the FT “we take issue with the comments Moody’s made regarding our financial position,” and a spokesperson says debt is below 9 times ebitda and the company is within its covenants. They repeat the silly take-my-trade-division-please idea that “the group was open to a sale of its consumer publishing arm,” as if a sale will come without their preparing an offering.
FT

Filed Under: Finance, Free

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