McGraw-Hill Education’s $1 Billion Offering May Price Today

Friday, March 15, 2013

McGraw-Hill Education, the digital learning company acquired by Apollo Global Management LLC, may price its $1 billion offering of eight-year, senior secured notes as soon as Friday.

The sale, which was initially marketed at $1.05 billion, may yield between 9.75 percent and 10 percent, according to a person with knowledge of the offering. Proceeds from the sale will fund the private-equity firm’s purchase of the unit from McGraw-Hill Cos., the person said, who asked not to be identified because terms aren’t set. Moody’s Investors Service rates the notes B2.

Chief Executive Officer Harold “Terry” McGraw III decided to sell the education division, which his great-grandfather started 125 years ago, after pressure from Jana Partners LLC, a New York-based hedge fund, and the Ontario Teachers’ Pension Plan.

McGraw-Hill Education increased the size of its term loan by $50 million to $610 million today, according to a person familiar with the transaction, who asked not to be identified because the information is private. Apollo is seeking a $240 million revolving line of credit, according to data compiled by Bloomberg. The New York-based company is contributing $950 million of equity to fund the $2.4 billion acquisition, Moody’s said in a March 5 statement.

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