The refinancing extends the company's debt maturity profile and provides liquidity headroom, but the higher coupon on the new 2033 notes increases fixed charges. Monitor the next quarterly filing for the impact of higher interest expense on EBITDA and leverage ratios.
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Executive Summary
McGraw-Hill Education completed a comprehensive refinancing on October 9, 2026, including a new $930 million term loan facility (Initial Term Loans), a new $150 million revolving credit facility, and the issuance of $400 million of 8.000% Senior Secured Notes due 2033. The proceeds were used to repay the existing 2025 Tranche B-2 Term Loans and redeem the 2028 Secured Notes. The ABL revolving credit facility was also amended to extend its maturity to five years and replace a non-consenting lender. This refinancing extends maturities and reduces near-term debt service, but increases total secured debt with a new higher-coupon note.
Key Facts
- New $930,000,000 Initial Term Loan facility established under the amended and restated cash flow credit agreement.
- New $150,000,000 Closing Date Revolving Commitments established under the cash flow credit agreement.
- Issuance of $400,000,000 aggregate principal amount of 8.000% Senior Secured Notes due 2033.
- Redemption or satisfaction and discharge in full of the $900,000,000 5.75% Senior Secured Notes due 2028.
- ABL revolving credit agreement amended to extend maturity to five years from October 9, 2026.
- Replacement of Macquarie Capital Funding, LLC as a non-consenting lender under the ABL facility.
- The ABL facility's unused line fee rate was reduced from 0.375%/0.250% to 0.1875%/0.125%.
- The ABL facility's U.S. Revolving Commitments were reduced from $265,000,000 to an undisclosed amount; the aggregate ABL commitments are now $300,000,000.
- The cash flow credit agreement's revolving commitments were reduced from an undisclosed amount to $150,000,000.
- The cash flow credit agreement's letter of credit sublimit was increased from $25,000,000 to $50,000,000.
Financial Impact
Total new debt of $1.33 billion ($930M term loan + $400M 2033 notes) used to refinance existing 2025 Tranche B-2 Term Loans and $900M 2028 Secured Notes. The new 2033 notes carry an 8.000% coupon vs. the retired 5.75% 2028 notes, increasing annual interest cost by approximately $9 million on that tranche.
Risk Factors
- Higher interest expense from the 8.000% 2033 notes vs. the retired 5.75% 2028 notes.
- Increased total secured debt load may pressure the Consolidated Secured Net Leverage Ratio.
- The refinancing was contingent on no Material Adverse Effect since March 31, 2026, suggesting potential business headwinds.
Investment Themes
Documents Analyzed
This report is based on 2 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001193125-26-419151 |
| Document: d147687dex101.htm | 0001193125-26-419151 |
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Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 9, 2026 17d ago | 8-K | $13.58 | awaiting T+20 | — | $14.44 (+6.33%) |
Sep 25, 2026 4w ago | 8-K | $12.73 $14.62 | ▲ +14.85% | ▲ +16.32% | $14.44 (+13.43%) |
Aug 13, 2026 10w ago | 8-K | $13.57 $12.32 | ▼ −9.21% | ▼ −7.46% | $14.44 (+6.41%) |
Jun 25, 2026 17w ago | DEFA14A | $9.49 $9.56 | ▲ +0.74% | ▼ −0.52% | $14.44 (+52.16%) |
Jun 11, 2026 19w ago | 8-K | $12.36 $9.89 | ▼ −19.98% | ▼ −21.87% | $14.44 (+16.83%) |
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