(Adds details about Cengage's business, creditor information,
By Nick Brown
NEW YORK, July 2 Textbook publisher Cengage
Learning Inc on Tuesday filed for bankruptcy protection as part
of a prearranged restructuring it said would help it eliminate
more than $4 billion of debt.
The company, which was acquired in a 2007 leveraged buyout
by private equity firm Apax Partners and Omers Capital Partners,
sought Chapter 11 protection from creditors with the U.S.
bankruptcy court in Brooklyn, New York.
Cengage said it had already received support for its plan
from an informal group of creditors holding about $2 billion in
According to a source close to the matter, that group is
comprised of holders of both bond and loan debt and includes
JPMorgan Chase & Co, KKR Asset Management, BlackRock Inc
and Oaktree Capital Management.
The plan would eliminate more than two-thirds of the
Stamford, Connecticut-based company's $5.8 billion in total
debt. Non-U.S. units are not part of the bankruptcy case.
Textbook publishers have struggled as more readers get
information online. Cengage, with nearly 5,500 employees and
about $2 billion in annual revenue, bills itself as the
second-largest producer of course materials in U.S. higher
It has made headway into digital learning through its
CengageCourse line, but other factors have hamstrung the
industry, including spending reductions by state and local
governments and the growth of the used book and book rental
Alvarez & Marsal is providing restructuring advice for
Cengage, while Lazard Ltd is serving as financial adviser and
Kirkland & Ellis is its legal counsel. The company said in a
statement it does not expect to need outside funding for its
bankruptcy, and that it would continue to operate its business.
It also filed court papers on Tuesday seeking permission to
maintain its insurance programs and keep paying its shipping,
warehousing and other bills.
Amers and Omers bought Cengage from the former Thomson Corp
as part of a $7.75 billion transaction.
Cengage had been known as Thomson Learning, and Thomson has
since been renamed Thomson Reuters Corp. Thomson has a
$1.46 million unsecured claim in Cengage's bankruptcy, court
About $1.2 billion of Cengage's debt load is unsecured,
according to a source close to the matter. Its largest such
obligations are $292 million in senior unsecured notes and
another $132 million in subordinated unsecured notes, according
to court filings.
Other notable unsecured creditors include Harvard University
economics professor N. Gregory Mankiw, who is owed about $1.6
million in royalty payments stemming Cengage publishing deals,
and Pennsylvania State University history professor Jackson
Spielvogel, owed $627,000 in such royalties. Mankiw and
Spielvogel could not immediately be reached on Tuesday.
The case is In re Cengage Learning Inc, U.S. Bankruptcy
Court, Eastern District of New York, No. 1-13-44106.
(Reporting by Jonathan Stempel and Nick Brown in New York;
Editing by Gerald E. McCormick, Toni Reinhold)