The $400 million "B" loan backing the $1.66 billion acquisition of Houghton-Mifflin was a blowout after launching to retail last Tuesday. The tranche, led by Goldman Sachs, CIBC World Markets and Deutsche Bank, was oversubscribed by just under four times. "It's a business that the market was able to understand," a banker said, explaining why the credit did well in syndication. The lead arrangers will cut back allocations to investors rather than increase the size of the tranche, he added. He dismissed reports that the "B" had been reduced to $250 million, with the difference made up through a bond piece. Officials at the lead banks declined comment.
The "B" loan is priced at LIBOR plus 33/ 4%, while the $325 million revolver has a spread of 31 /4 % over LIBOR. The $725 million facility backs Thomas H. Lee and Bain Capital's purchase of Houghton from Vivendi Universal. The transaction also includes a $500 million bond offering. The acquisition of the Boston-based educational company was completed Dec. 31 of last year. The Blackstone Group also has a smaller investment in the transaction. The buyout shops bought the company from Vivendi for $1.28 billion in cash and assumed $380 million of Vivendi's debt. Calls to Mark Nunnelly, managing director at Bain, and officials at Thomas H. Lee were not returned.