Moody's cuts Houghton Mifflin

Moody's Investors Service said it lowered Houghton Mifflin Harcourt Publishers Inc.'s corporate family rating, probability of default rating and debt instrument ratings to Ca from Caa3.

The outlook is stable.

Moody's said the action reflects the high likelihood of a near-term default following the company's announcement that it reached an agreement with more than 70% of its lenders and bondholders to convert all of its existing debt to equity.

Houghton Mifflin plans to shortly file for Chapter 11 bankruptcy to facilitate a pre-packaged reorganization that it expects to complete by the end of June 2012, the agency said.

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