Lenders to soon take control of PE-backed Nelson Education

Private equity-backed Nelson Education, a Canadian educational publisher, recently obtained creditor protection and is expected to soon yield control of the business to a group of first lien lenders.

Nelson, which has been owned by Apax Partners and OMERS Private Equity since 2007, recently sought protection under the federal Companies’ Creditors Arrangement Act (CCAA). In May, protection was granted and Alvarez & Marsal Canada was charged with monitoring the company as it began restructuring of its financial affairs.

In connection with CCAA proceedings, Nelson said in a website posting it has also reached an agreement with senior secured first lien lenders to create a new entity to acquire substantially all of the company’s assets and obligations. The new entity will be owned by the first lien lenders.

In its website statement, Nelson noted the court-supervised deal is expected to wrap up in June. No financial terms were disclosed.

Nelson said the agreement with lenders will significantly reduce its overall debt. It will also preserve “the value of the Nelson business” and allow it to continue uninterrupted so it can eventually re-establish as “a much stronger Canadian educational publishing company.”

Nelson also said it will have the funding necessary “to carry on our business as usual” while CCAA proceedings and the acquisition transaction are being completed.

Nelson and Alvarez did not respond to requests for comment. OMERS declined to comment.

Nelson’s announcement follows a March report by Bloomberg that suggested Apax and OMERS were preparing to relinquish control of the company to top-tier lenders. Ares Management, Citigroup, Mudrick Capital Management and Sound Point Capital Management were said to be among the lenders negotiating a deal with Nelson.

Apax and OMERS bought Nelson and its U.S. affiliate Cengage Learning in 2007. The two businesses, which previously formed part of the education publishing division of Thomson Corp, now Thomson Reuters, went for US$7.75 billion in cash.

Nelson and Cengage both encountered headwinds in subsequent years. Cengage filed for Chapter 11 protection in the U.S. in 2013 and struck a deal with lenders to address its debt burden and improve its capital structure. It re-emerged from restructuring in April of last year.

Based in Toronto, Nelson provides learning content and resources to K-12, higher education, industry and government markets.

Photo courtesy of Shutterstock