When many people think of textbook publishing companies, they likely don’t think of companies that will have financial difficulties. One textbook company, Cengage Learning, had to file for Chapter 11 bankruptcy nine months ago in the Eastern District of New York. When it filed, it was with a prearranged restructuring. The company has recently ended the bankruptcy after cutting the debt it holds by more than two-thirds.
Cengage’s chief executive says that this deal gives the company flexibility and resources necessary for growth while providing it with a firm financial foundation. The company, which has nearly 5,500 employees, says it is the second-largest producer of U.S. higher education course materials.
The company, which was owned by Thomson Reuters Corp., was purchased by Apax and Omers Capital Partners for $7.75 billion. Cengage, which has an annual revenue of around $2 billion, managed to cut $4 billion in debt. It also secured $1.7 billion to help fund its exit from bankruptcy. Cengage assumed a contract on which Thomson Reuters based a $1.46 million unsecured claim. A spokeswoman for Cengage says Thomson Reuters will get the full payment.
Authors of books who have content published through the textbook giant will receive royalty payments in accordance with their contracts. First-lien holders will get most of the company’s new equity. Unsecured creditors and second-lien holders will get a share of $225 million in stock or cash.
Coming out of bankruptcy is big news for any business. If your business is considering bankruptcy, it’s important for you to know all your options. An experienced bankruptcy attorney can provide information about which type of bankruptcy would best meet your needs.
Source: Reuters, “UPDATE 1-Cengage exits bankruptcy after cutting debt by two thirds” Nick Brown, Apr. 01, 2014by