New Issue: Houghton Mifflin holding company sells $265 million 0% five-year notes to yield 11½%

By Paul A. Harris

St. Louis, Sept. 30 - HM Publishing Co. priced $265 million face amount of five-year zero coupon senior discount notes due Oct. 15, 2013 (Caa1/B) at 56.96 on Tuesday to yield 11½%, according to a syndicate source.

The sale resulted in $150.944 million of proceeds.

Deutsche Bank Securities, Goldman Sachs & Co. and CIBC World Markets were bookrunners on the Rule 144A deal. The co-managers were Fleet Securities and Banc One Capital Markets.

HM Publishing, the parent of Boston-based publisher Houghton Mifflin, will use proceeds to make a dividend payment to sponsors.

Issuer:	HM Publishing Co. (Houghton Mifflin)
Face amount:	$265 million
Proceeds:	$150.944 million
Maturity:	Oct. 15, 2013
Security description:	Senior discount notes
Bookrunners:	Deutsche Bank Securities, Goldman Sachs, CIBC World Markets
Co-managers:	Fleet Securities, Banc One Capital Markets
Coupon:	0% for five years
Price:	56.96
Yield:	11½% (to maturity)
Spread:	745 basis points
Call features:	Callable after Oct. 15, 2008 at 105.75, then 103.833, 101.917, declining to par on Oct. 15, 2011 and thereafter
Equity clawback:	Until Oct. 15, 2006 for 35% at 111.50
Settlement date:	Oct. 3
Ratings:	Moody's: Caa1
	Standard & Poor's: B
Rule 144A Cusip:	40425LAA4

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