McGraw-Hill Education Plans $600 Million Debt as Split Nears

McGraw-Hill Education Inc., the textbook-publishing company that’s being split off from its parent, will have about $2.4 billion in assets and $600 million in debt, according to a regulatory filing.

The textbook spinoff will sell $400 million of bonds, borrow $200 million with a term loan and take out a $350 million revolving credit line, McGraw-Hill Education said today in the filing. The publishing company, which would have lost $63 million in the quarter ended in March, will also pay a dividend of as much as $500 million to McGraw-Hill Cos.

McGraw-Hill Cos., the owner of Standard & Poor’s, said Sept. 12 it will break into two companies, one focused on financial information and the other on educational publishing. The company remains on track to complete the split by the end of the year, it said today in a statement.

“As we get ready to launch McGraw-Hill Education, we are very well positioned to take advantage of new opportunities created by the rapid expansion of digital products and services,” Lloyd “Buzz” Waterhouse, who was named president of McGraw-Hill Education in June, said in the statement.

McGraw-Hill Cos. stockholders will receive one share of the new education business for every three shares they hold, according to the filing. The publishing company, which plans to pay dividends, would have made $162 million last year on $2.29 billion of revenue.

Getting rid of the slow-growth education business will boost McGraw-Hill Cos.’s stock price, Peter Appert, an analyst at Piper Jaffray & Co. in San Francisco, wrote in a report last month. Investors will value the financial-information company more highly without the volatility of the publishing business, said Appert, who has the equivalent of a “buy” rating on the stock and says it may climb to $54.

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