NEW YORK (
Houghton Mifflin Harcourt HMHC surged in its market debut Thursday as Paulson & Co. among other investors took the book publisher public.
Shares jumped 32% to close at $15.86 after the New York-based publisher was priced at $12 per share on Wednesday. Less than two weeks ago, the Boston company said in a Securities and Exchange Commission filing that it could seek as much as $16 per share, much closer to its trading level Thursday.
The educational and trade publisher that owns literary brands such as "Curious George" and "The Lord of the Rings" sold 18.25 million shares for nearly $220 million.Goldman, Sachs & Co.,Morgan Stanley& Co. and other underwriters have the option to purchase an additional 2.7 million shares.
Houghton Mifflin Harcourt has nearly 140 million shares outstanding, putting its equity value at about $2.1 billion.
The company does not receive proceeds from the IPO.
John Paulson's hedge fund is selling nearly 5.5 million shares, but will still be the largest shareholder with almost 23% of the equity.
Anchorage Funds andAvenue Capital Management LLCare also selling stock, and will hold 13% and 8.8% of the equity following the offering.
Other shareholders includeAbry Partners LLC, Blackrock Inc. and affiliates of Geoffrey Raynor-controlled fundsAmalgamated Gadget LPand Q Global Capital Management LP.
The company had nearly $1.3 billion in 2012 sales, 88% of which came from its education division.
Sales were essentially flat from the prior year, but Houghton Mifflin Harcourt's operating loss fell from $2 billion in 2011 to $120 million in 2012.
Houghton Mifflin Harcourt reorganized its balance sheet through bankruptcy in 2012, reducing its debt from $3.1 billion to $250 million. The restructuring greatly reduced interest expense, which fell from nearly $250 million in 2011 to $16 million in the first nine months of 2013.
The company was formed by mergers. Riverdeep Group plc. purchased Houghton Mifflin Group in 2006, and acquired Harcourt Education Group in 2007. Houghton Mifflin Harcourt restructured out of court in 2010, and Riverdeep relinquished control of the company.
--By Chris Nolter in New York.
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