It's Ch. 11 for publisher Houghton Mifflin
- Article by: DAWN McCARTY
- Bloomberg News
- May 21, 2012 - 9:02 PM
Houghton Mifflin Harcourt Publishing Co., the publisher of authors from Mark Twain to J.R.R. Tolkien, sought bankruptcy protection Monday to eliminate more than $3 billion in debt.
The company, based in Boston, listed $2.68 billion in assets and $3.53 billion in debt in Chapter 11 documents filed Monday in U.S. Bankruptcy Court in Manhattan. More than 20 affiliates also entered bankruptcy, including Broderbund and Classroom Connect.
"The global financial crisis over the past several years has negatively affected" Houghton Mifflin's financial performance, in a business that "depends largely on state and local funding" for the schoolbook market, said William Bayers, company general counsel, in court papers.
He cited "recession-driven decreases" and "purchase deferrals" by the states and a "lack of anticipated federal stimulus support" for "substantial revenue decline."
The filing comes as traditional print-book publishing faces growing competition from e-books. Sales of adult paperbacks and hardcover books fell 18 percent from 2010 to 2011, according to the Association of American Publishers. Borders Group, the second-largest U.S. bookstore chain, filed for bankruptcy in February 2011.
Among Houghton Mifflin's largest unsecured creditors listed in court papers were Chicago-based R.R. Donnelley & Sons Co. and New York-based Williams Lea Inc., owed more than $20 million each in trade debt.
Houghton said May 11 it received support from more than 70 percent of its lenders to restructure its debt. The company has about $2.85 billion of loans maturing in the next two years, according to data compiled by Bloomberg.
The company, with about $1.29 billion in sales last year, said it plans to borrow as much as $500 million through Citigroup to complete the bankruptcy process, court papers show.
Houghton provides educational products and services to about 60 million students in 120 countries, according to its website. The company also prints and distributes electronic books owned by one of Amazon.com Inc.'s publishing arms, under an agreement announced in January.
Houghton's origins date to 1832, according to the company.
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