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McGraw-Hill’s education unit sale to buyout firm Apollo now all-cash

5 Mar 2013

dollar4_sqMcGraw-Hill Companies has decided to take cash instead of unsecured notes in return for its education unit, which is being sold to private equity firm Apollo Global Management.

The financial publishing company will receive $150m in cash from Apollo at the close of the $2.5bn sale instead of unsecured notes worth $250m at an annual interest rate of 8.5 per cent.

In addition to McGraw-Hill education, the group also owns rating agency Standard & Poor’s, which has recently been hit with a $5bn lawsuit from the US Justice Department for allegedly misrepresenting risks associated with mortgage bonds in the build up to the credit crunch.

Since the allegations were made public a month ago, shares in McGraw-Hill have lost more than 20 per cent of their value.

McGraw-Hill planned to float the education unit before agreeing to sell it to Apollo late last year.

Following the sale, McGraw-Hill will be renamed McGraw Hill Financial and will operate as a benchmarks, content and analytics company in the global capital and commodities markets.

Back in November AltAssets reported that Apollo had beaten private equity rival Bain Capital to enter exclusive talks to buy the McGraw-Hill Education business.

In the same month it was reported that Apollo had begun fundraising for its latest buyout vehicle, targeting $12bn.

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