McGraw-Hill Education ups term loan to $610 million, lifts spread

By Sara Rosenberg

New York, March 14 - McGraw-Hill Global Education Holdings LLC upsized its six-year covenant-light term loan to $610 million from $560 million and increased pricing to Libor plus 775 basis points from talk of Libor plus 650 bps to 700 bps, according to market sources.

Also, the original issue discount on the term loan was widened to 97 from 98, sources said.

The 1.25% Libor floor and 101 soft call protection for one year were unchanged.

Commitments for the term loan were due at 5 p.m. ET on Thursday.

The company's now $850 million senior secured credit facility (B2/NA/BB), up from $800 million, also includes a $240 million five-year revolver.

Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding Inc., Jefferies & Co., UBS Investment Bank, Nomura and BMO Capital Markets Corp. are leading the deal.

Proceeds will be used to help fund the buyout of the company by Apollo Global Management LLC from McGraw-Hill Cos. for $2.5 billion, subject to certain closing adjustments.

Other funds for the transaction will come from $1 billion of secured notes that were downsized from $1.05 billion as a result of the term loan upsizing, sources added.

As part of the transaction, McGraw-Hill will receive an additional $150 million in cash at closing from the investment funds affiliated with Apollo Global Management, in lieu of being issued $250 million in face amount of unsecured notes by a holding company of McGraw-Hill Education.

The holding company notes were expected to carry an annual interest rate of 8½% until five years from closing and then pricing would have increased to 11% per annum.

Closing is subject to regulatory approval and customary conditions.

McGraw-Hill Education is a New York-based digital learning company.

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