McGraw-Hill caps tender for PIK notes due 2019 at $200 million

By Susanna Moon

Chicago, Dec. 11 – McGraw-Hill Global Education Intermediate Holdings, LLC said its subsidiaries are now offering to repurchase to up to $200 million of their $443,621,000 outstanding 8½%/9¼% senior PIK toggle notes due 2019.

McGraw-Hill said on Nov. 29 that two of its wholly owned subsidiaries, MHGE Parent, LLC and MHGE Finance, Inc., were tendering for any and all of the PIK notes and that they planned to redeem any remaining notes on Dec. 29.

The company then capped the offer on Monday and extended the early deadline to 5 p.m. ET on Dec. 14 after pulling its planned new notes issue 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 early deadline was extended from 5 p.m. ET on Dec. 12.

Tenders may be withdrawn at any time before 5 p.m. ET on Dec. 14, extended from 5 p.m. ET on Dec. 12.

Settlement is expected to occur on Dec. 15 for early tendered notes and on Dec. 28 for remaining tenders.

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.

The issuers withdrew the conditional call and expect to issue a new conditional redemption notice on Dec. 11 with a redemption date reset for Jan. 10 for an amount of notes equal to the tender cap less the amount purchased in the tender offer, according to a company update on Monday.

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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