McGraw-Hill tender for PIK notes oversubscribed, to buy $200 million

New York, Dec. 14 – McGraw-Hill Global Education Intermediate Holdings, LLC said its subsidiaries received tenders for $356,454,000, or 80.35%, of their $443,621,000 outstanding 8½%/9¼% senior PIK toggle notes due 2019 by the early deadline of the offer on 5 p.m. ET on Dec. 14.

The response exceeded the $200 million cap and consequently the company will accept notes on a pro rata basis, according to a news release.

Settlement is planned for Dec. 15.

On Dec. 11, the company imposed a cap on the previously uncapped offer, which was announced on Nov. 29.

Originally, the subsidiaries, MHGE Parent, LLC and MHGE Finance, Inc., were tendering for any and all of the PIK notes.

They planned to redeem any remaining notes on Dec. 29. With the cap, the company issued a conditional notice of redemption for $200 million less the amount purchased in the tender.

Along with the introduction of the cap, the company also extended the early deadline to 5 p.m. ET on Dec. 14 from 5 p.m. ET on Dec. 12.

The changes in the tender followed the company’s decision to abandon plans for an offering of new notes on Dec. 8.

The issuers also were soliciting consents from noteholders to amend the terms to eliminate substantially all of the restrictive covenants and some other events of default.

Holders who tender their notes by the early deadline will receive the total purchase price of $1,002.75 per $1,000 principal amount, which includes a $30.00 consent payment.

The base tender offer price will be $972.75 per $1,000 principal amount, or the total amount less the consent payment.

The companies said they will also pay accrued interest.

The tender offer is set to continue until midnight ET on Dec. 26.

The tender is contingent upon MHGE Parent or one or more of its affiliates having closed a debt financing with enough proceeds to help fund the offer, along with cash on hand.

As reported Dec. 8, McGraw-Hill ditched its proposed $250 million offering of MHGE Parent, LLC and MHGE Parent Finance, Inc. senior PIK toggle notes amid news that the deal was characterized by concessions to potential investors with price talk widening and call protection increasing. Most recent talk had the notes coming with a 10% coupon at a reoffer price of 99. Earlier talk was in the 9½% area.

Credit Suisse Securities (USA) LLC (212 538-2147 or 800 820-1653) is the dealer manager and solicitation agent. D.F. King & Co. (212 269-5552 for brokers and banks or 866 745-0270 for all others) is the information agent.

McGraw-Hill is a New York-based provider of education materials.

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