Houghton Mifflin Harcourt Announces Commencement of Asset Sale Offer and Collateral Asset Sale Offer to Purchase Up to $158 Million of Senior Secured Notes

BOSTON, May 11, 2021 /PRNewswire/ -- Learning technology leader Houghton Mifflin Harcourt ("HMH" or the "Company") (Nasdaq: HMHC) announced today that its wholly owned subsidiaries, Houghton Mifflin Harcourt Publishers Inc., Houghton Mifflin Harcourt Publishing Company and HMH Publishers LLC, are commencing a cash tender offer (the "Asset Sale Offer") to purchase up to $158 million aggregate principal amount (the "Offer Amount") of their 9.000% Senior Secured Notes due 2025 (the "Notes"), at a purchase price of 100% of the principal amount thereof plus accrued and unpaid interest to, but not including, the purchase date.

The Asset Sale Offer is being made pursuant to the indenture governing the Notes (the "Indenture") as a result of the Company's sale of all of the assets, including intellectual property, used primarily in its HMH Books & Media segment (the "Books & Media Asset Sale") as set forth in that certain Asset Purchase Agreement dated March 26, 2021 (the "Purchase Agreement") among Houghton Mifflin Harcourt Publishing Company, HarperCollins Publishers L.L.C. (the "Purchaser") and solely for purposes of guaranteeing the obligations of the Purchaser under the Purchase Agreement, News Corporation, the Purchaser's parent company.

The Books & Media Asset Sale constituted an "Asset Sale" under the Indenture requiring an "Asset Sale Offer" and "Collateral Asset Sale Offer" under the Indenture. The source of funds is cash on hand from the proceeds of the Books & Media Asset Sale.

The Asset Sale Offer will expire at 11:59 p.m., New York City time, on June 8, 2021, unless extended by the Company, in its sole discretion (the "Expiration Time"). If the aggregate principal amount of Notes and other first Lien obligations and any other indebtedness that ranks pari passu to the Notes, in each case subject to Section 4.10 of the Indenture, surrendered by the holders thereof exceeds the Offer Amount, only the Offer Amount will be accepted for purchase, and the Notes and such indebtedness to be purchased on a pro rata basis with such adjustments as may be needed so that only Notes in minimum amounts of $2,000 and integral multiples of $1,000 in excess thereof will be so purchased.

In the event that the aggregate principal amount of tendered and accepted Notes is less than the Offer Amount, any amount less than the Offer Amount not used for the purchase of Notes pursuant to the Asset Sale Offer will be available for use in any manner permitted under the Indenture, including the repayment of debt.

The Asset Sale Offer is being made pursuant to an Offer to Purchase, dated May 11, 2021, and related documents (collectively, the "Offer Documents"), which set forth the complete terms and conditions of the Asset Sale Offer. The Asset Sale Offer is made only by and pursuant to the terms set forth in the Offer Documents, and the information in this press release is qualified by reference to those documents. Subject to applicable law, the Company may amend, extend or terminate the Asset Sale Offer.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any Notes. The Asset Sale Offer does not constitute an offer to purchase Notes in any jurisdiction in which, or to or from any person to or from whom, it is unlawful to make such offer under applicable securities laws.

The Asset Sale Offer is being made only pursuant to the Offer Documents that the Company will distribute to its Noteholders, and Noteholders should read carefully the offer documents because they contain important information, including the various terms of, and conditions to, the Asset Sale Offer. Noteholders are urged to carefully read these materials prior to making any decision with respect to the Asset Sale Offer.

About Houghton Mifflin Harcourt

Houghton Mifflin Harcourt (Nasdaq: HMHC) is a learning technology company committed to delivering integrated solutions that engage learners, empower educators and improve student outcomes. As a leading provider of K–12 core curriculum, supplemental and intervention solutions and professional learning services, HMH partners with educators and school districts to uncover solutions that unlock students' potential and extend teachers' capabilities. HMH serves more than 50 million students and three million educators in 150 countries.

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Bianca Olson
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Forward-Looking Statements

The statements contained herein include forward-looking statements which involve risks and uncertainties. Forward-looking statements include all statements that are not statements of historical facts, including statements regarding our efforts to execute on the Asset Sale Offer, our Digital First, Connected growth strategy, to establish ourselves as a pure-play K-12 learning technology company and to generate free cash flow. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. We caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are based upon information available to us on the date of this press release.

We caution you that forward-looking statements are not guarantees of future performance and that actual results may differ materially from those made in or suggested by the forward-looking statements contained herein. Important factors that could cause actual results to vary from expectations include, but are not limited to: the duration and severity of the COVID-19 pandemic and its impact on the federal, state and local economies and on K-12 schools; any delays in receiving required regulatory approvals in connection with our recently announced agreement to sell the HMH Books & Media business or in satisfying other closing conditions and any disruptions in the global credit and financial markets that could have a negative impact on the completion of the proposed transaction; any disruption resulting from the proposed transaction that adversely affects our businesses and business relationships, including with employees and suppliers; the rate and state of technological change; state requirements related to digital instructional materials; our ability to execute on our Digital First, Connected growth strategy; increases in our operating costs; our ability to retain and hire key personnel; and other factors discussed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. These forward-looking statements speak only as of the date of this press release, and we do not assume any obligation to update or revise any forward-looking statement made herein.

SOURCE Houghton Mifflin Harcourt