Houghton Mifflin Harcourt Co.’s shares jumped in their trading debut, after the schoolbook publisher priced its initial public offering for less than it expected.
Shares of the Boston company — which also publishes popular titles such as “Curious George” and J.R.R. Tolkien’s “The Hobbit” as well as a new book about Yogi Berra — were up 21% at $14.51 in late-morning trading, moments after opening at $14 on the Nasdaq Stock Market.
Insiders such as hedge fund firms Paulson & Co. and Avenue Capital Group will receive all proceeds from the offering. Late Wednesday, they agreed to a price of $12 a share for the 18.3 million-share deal, raising $219 million before the potential sale of additional shares by underwriters.
Houghton Mifflin had expected the shares to fetch $14 to $16 each, according to a regulatory filing.
The IPO follows a restructuring last year that eliminated about $3 billion in debt, the legacy of a pair of acquisitions in 2006 and 2007 that created the company in its current form. The financial crisis caught the company wrongfooted soon after it took on the heavy debt load, as budget cuts by state and local governments slashed spending on K-12 textbooks.
Houghton Mifflin’s education business accounts for the vast bulk of its sales — 88% of its total revenue last year. For 2012, Houghton Mifflin posted a loss of $87 million as sales slipped 0.7% from a year earlier to $1.3 billion.
A group of investment firms such as Paulson & Co., Avenue, Anchorage Capital Group LLC and BlackRock Inc.(BLK) will continue to own most of the company after the IPO.
Goldman Sachs Group Inc.(GS) led the offering with Morgan Stanley(MS).
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