Textbook publisher and education company Cengage Learning announced that it has sought Chapter 11 bankruptcy protection as part of a pre-arranged restructuring plan that will enable it to reduce its $5.8 billion in outstanding debt.
The company filed for protection in the U.S. Bankruptcy Court in Brooklyn, New York. Like many other textbook publishers, it has struggled to remain profitable as more consumers move toward online publishing materials and resources. Cengage said it has entered into a restructuring agreement with lenders – including JPMorgan Chase & Co , KKR Asset Management, BlackRock Inc., and Oaktree Capital Management – who hold $2 billion of first-lien debt, Reuters reports.
Photo courtesy of Jonas Jacobsson (Unsplash.com)
Overall, the restructuring is designed to help Cengage shed roughly $4 billion in debt from its balance sheets. In addition, Cengage noted that it has substantial cash balances and expects to generate positive cash flow, and it therefore does not intend to obtain debtor-in-possession (DIP) financing. Further, the company’s non-U.S. subsidiaries are not included in the U.S. Chapter 11 filings and will continue to operate without interruption.
“The decisive actions we are taking today will reduce our debt and improve our capital structure to support our long-term business strategy of transitioning from traditional print models to digital educational and research materials,” said Michael Hansen, Cengage Learning’s chief executive.
Cengage Learning, formerly Thompson Learning, was acquired in a 2007 leveraged buyout by private equity firm Apax Partners and Omers Capital Partners. The company later purchased the college publishing division of Houghton Mifflin Harcourt Publishing for $750 million, and in 2011, acquired National Geographic’s digital and print school publishing unit, the New York Times reports.
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