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Houghton IPO could raise $250m, analysts say

Boston book publisher Houghton Mifflin Harcourt has filed for an initial public offering of stock that analysts say could raise $250 million, a sign that the company's prospects are improving one year after it emerged from bankruptcy.

Chief executive Linda K. Zecher has talked openly about taking the publisher public since last summer, when creditors agreed to exchange $3.1 billion of debt for stakes in the company. An IPO could help the lenders begin to recoup their investments.

In documents submitted to the Securities and Exchange Commission Friday, Houghton said it planned to raise up to $100 million by selling stock to the public. But Renaissance Capital, a Greenwich, Conn., firm that tracks IPOs, predicts an offering would fetch as much as $250 million.


Tom Taulli, editor of the InvestorPlace IPO Playbook blog, said the Houghton filing is an early sign of a turnaround. "You don't just file for an IPO, so clearly they think there will be a market," he said. "And the overall economy is improving."

Houghton officials are barred by SEC regulations from commenting publicly to promote the company ahead of a possible IPO.

The 181-year-old company has been in tumult for more than a decade, changing ownership frequently and racking up debt.

In one transaction, former Irish investment banker Barry O'Callaghan bought Houghton Mifflin in 2006 from private equity firms Bain Capital and Thomas H. Lee Partners of Boston, and the Blackstone Group of New York. O'Callaghan borrowed heavily to finance the purchase, then borrowed more to buy Harcourt Education a year later, creating the company now known as Houghton Mifflin Harcourt. The purchases cost a combined $7.4 billion.

Since then, the company has struggled to pay its debt, as state and local budget cuts that followed the recession sliced spending on education materials. In 2011, the year before Houghton filed for bankruptcy, the company sustained net losses of $2.2 billion, and O'Callaghan resigned as CEO.


Last year, Houghton's finances improved significantly, with losses shrinking to $87.1 million. Through the first six months of this year, the company has lost $151.6 million.

Houghton's properties include some signature franchises, including "The Lord of the Rings," "Curious George," "Cliffs Notes," and "Webster's New World Dictionary."

But textbooks, Houghton's main business, have been hurt by competition from online references that enable students to research history, science, and other subjects that they traditionally studied in print. In its latest counterpunch, Houghton last month unveiled a new e-commerce site that offers educational mobile applications and other digital learning tools to teachers, parents, and students. An app featuring Curious George that builds math skills costs $2.99 to download, for instance.

Callum Borchers can be reached at callum.borchers@globe.com.