McGraw Hill completes term loan repricing, cuts interest rate by 50 bps

NEW YORK - McGraw Hill, Inc. (NYSE:MH) announced Tuesday that its subsidiary McGraw-Hill Education, Inc. has successfully completed a repricing of its Credit Agreement, reducing the applicable interest rate by 50 basis points from Term SOFR plus 3.25% to Term SOFR plus 2.75%. The move comes as the company faces significant leverage, with InvestingPro data showing a debt-to-equity ratio of 11.49x and current ratio of 0.83x, indicating tight liquidity conditions.

The education solutions provider noted that the interest rate could be further reduced by an additional 25 basis points if the borrower maintains ratings of at least B+ from S&P and B1 from Moody’s Investor Service, both with stable or better outlook. The maturity date of the Credit Agreement remains unchanged, with all other terms substantially the same.

This repricing follows the company’s earlier move to prepay approximately $385 million of principal amount of its existing senior secured first lien term loan facility due 2031, using net proceeds from its initial public offering completed on July 25, 2025. That prepayment reduced the principal amount from $1,157 million to $771 million. While currently unprofitable, InvestingPro analysis indicates positive momentum ahead, with analysts forecasting earnings of $1.05 per share for fiscal year 2026.

"Between the recent term loan prepayment and this successful repricing effort, we have reduced our annualized interest expense by over $30 million," said Bob Sallmann, Chief Financial Officer of McGraw Hill, according to the press release.

McGraw Hill describes itself as a global provider of education solutions for preK-12, higher education and professional learning, with offices across North America, Asia, Australia, Europe, the Middle East and South America. The company makes its learning solutions available in more than 80 languages. With annual revenue of $2.1 billion and impressive gross margins of 80%, the company maintains a strong market position. InvestingPro subscribers can access additional insights, including 8 more key tips about McGraw Hill’s financial health and market position.

The information in this article is based on a company press release statement.

In other recent news, McGraw-Hill Education has seen several significant developments. The company successfully completed its initial public offering, pricing 24.4 million shares at $17 each, raising approximately $386 million. This capital was used to reduce a portion of its $1.2 billion term loan. Moody’s Ratings responded to the IPO by affirming McGraw-Hill’s B2 Corporate Family Rating and upgrading its outlook from stable to positive. Analysts have shown a favorable view of McGraw-Hill, with Macquarie initiating coverage with an Outperform rating and a price target of $19, citing the company’s strong market position and stable revenue streams. William Blair also initiated coverage with an Outperform rating, highlighting McGraw-Hill’s robust financial performance, including an 80% gross margin and 35% EBITDA margin in fiscal 2025. BTIG gave the company a Buy rating, noting its successful digital transformation and increased Remaining Performance Obligation. Lastly, Morgan Stanley initiated coverage with an Overweight rating and a $20 price target, emphasizing McGraw-Hill’s leadership in the $30 billion education content market.

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