Hard copy books are becoming a thing of the past, especially with the advancement in technology for electronic readers. As a result, many book publishing companies have taken the hit to profitability. The publisher of popular children’s books and most classroom textbooks, Houghton Mifflin, filed for Chapter 11 bankruptcy this week.
Reading Between The Lines
Severe budget cuts from school districts and state contracts have lead one of the leading publishing companies into financial trouble. Despite their 41% market share in the K-12 educational materials industry, the company hasn’t been able to meet debt obligations to creditors. Reporting over $3 billion in debts, Houghton Mifflin is hoping to resolve debts to creditors through reorganization.
Unfortunately, this isn’t the first time that Houghton Mifflin has faced debt troubles, as they just completed a prior debt restructuring just over two years ago. During that time they raised $650 million of equity capital from investors. This time, the company is going with a “pre-packaged” bankruptcy plan that should coincide with the state and local budget cuts they are facing. Houghton Mifflin hopes that they, once again, gain the support of stakeholders and emerge from Chapter 11 by the end of June.