Tuesday, May 22, 2012
Textbook Giant brought to knees by economy
Textbook publisher hurt by government cutbacks
Jonathan Stempel (Reuters) reports that Houghton Mifflin Harcourt Publishers Inc, whose textbooks have been a staple in American schoolhouses for decades, filed for Chapter 11 bankruptcy protection on Monday after agreeing with creditors to eliminate $3.1 billion of debt.
The "pre-packaged" bankruptcy would give control of Houghton Mifflin to its lenders.
It comes as cash-strapped state and local governments defer or cancel education-related purchases, reducing demand for textbooks for students from kindergarten to 12th grade.
Traditional book publishers also face pressure from the online availability of published material, including e-books.
Houghton Mifflin has a 41 percent market share in the K-12 educational material and services sector, and its education business accounts for about 90 percent of revenue.
The Boston-based company lost $2.18 billion last year, including a $1.67 billion writedown, as net sales fell 14 percent to $1.3 billion.
Houghton Mifflin and two dozen affiliates filed for protection in U.S. bankruptcy court in Manhattan.
In a court filing, general counsel William Bayers said the reorganization has support from 90.3 percent of creditors and 76 percent of equity investors eligible to vote.
Houghton Mifflin expects to emerge from bankruptcy by June 30. The company said it has $2.68 billion of assets and $3.54 billion of liabilities, and employs 3,300 people.
With a history dating to 1832, Houghton Mifflin said its products serve 60 million students in 120 countries.
The company also publishes the "Curious George" and J.R.R. Tolkien's "Lord of the Rings" children's book series, and games such as "Where in the World is Carmen Sandiego?"
Houghton Mifflin also agreed in January to distribute titles from an Amazon.com Inc publishing unit.