What a tangled web Barry O'Callaghan did weave when first he practiced to borrow his way into educational publishing materials nirvana.
One acquisition after another, and before long he had EMPG, a debt-laden whale that was propped up by Istithmar World Capital. All looked well on the minnow's horizon.
As bad luck would have it, Istithmar World Capital is situated in Dubai, owned by the very people who have asked the world to hold off on getting repaid on $60 billion in debt.
As Istithmar must come up with some cash to make its payments or face a total meltdown, those associated with EMPG (Houghton Mifflin Harcourt, for example) are wondering if Dubai's stock in EMPG will have to be sold to raise money.
There is more to Dubai's financial woes than a sharp decline in the real estate investment market, although that is said to be the trigger that started the trouble. Having borrowed heavily to promote Dubai real estate, tourism and other non-crude oil ventures, the nation-state is hard-pressed to carry the debt load of others. Others being Barry O'Callaghan's former minnow of an educational materials publisher.
As one investor that took a big chunk of EMPG during the $7 billion debt restructuring, Istithmar now must exit its position. That being the case, is there anyone who wants to buy?
Chances are good that such stock would go at fire-sale prices, given the shaky situation in the entire publishing industry. The set-up that got HMH Riverdeep et.al. out of some seriously boiling hot water is looking more like a house of cards, and the foundation is on the verge of washing away.
2 comments:
Wow. It seems inevitable, but is there actual information that the sale will happen, or is it still speculation at this point?
It's speculation at this point, analyzing the most likely assets to be liquidated by Dubai's holding company.
There's talk that Abu Dhabi will step in to shore up Dubai, but what that might mean for EMPG is anyone's guess.
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