Cengage reaches settlement with creditors

Cengage reaches settlement with creditors

Cengage Learning has reached an agreement with its major creditors to reduce its outstanding debt by $4bn.

The US-based company confirmed that its global stakeholders have agreed to support its “Plan of Reorganisation” which includes shifting its business model to digital products and services.

Under the terms of the settlement, still subject to court approval, the agreement will eliminate more than $4bn of Cengage Learning’s approximately $5.8bn of outstanding funded debt. If the court approves the plan, Cengage will effectively complete its restructuring and emerge from Chapter 11.

Michael Hansen, chief executive officer of Cengage Learning, said: “Under the plan, Cengage Learning will have a new capital structure with a substantially stronger balance sheet and greater financial flexibility to accelerate our growth.” He added: “We are excited about the opportunities resulting from the ongoing transformation of our business to digital products and services and the high-quality educational content we are providing to our users and customers.”

Under the agreement, the company will also secure exit financing of approximately $1.75bn to $2bn.   

A statement on Cengage Learning’s website said: “To meet our customers' evolving needs and position our company for growth and profitability, Cengage Learning has been taking steps to enhance our customer relationships and introduce innovative digital and print products and services. To support our long-term business strategy, we also have been working to reduce corporate debt and strengthen our financial foundation. The restructuring will give Cengage Learning greater capacity to move forward as a successful digital education leader and world-class information provider.”

The global settlement was reached through a mediation process conducted by Judge Robert Drain of the U.S. Bankruptcy Court in the Southern District of New York. The company will now file a disclosure statement and amended plan with a court approval in the near-term.