Wednesday, September 28, 2011

New Fishermen Trawling For A Big Catch

John Paulson gobbled up the whale-swallowing minnow after Barry O'Callaghan choked on his venture.

If you believe the stories being floated by the Wall Street Journal, Mr. Paulson is gasping for air, and Houghton Mifflin Harcourt Riverdeep Greenwood et al. is about to be floated out to sea once again.

The hedge fund manager is facing losses, they say. Who wouldn't be facing losses? The market is in a tailspin, Greece is about to default on its debt, the banks holding that debt are going to take a hit, and so the house of cards tumbles.

Something has to be sold to ease the pressure. Or, in Mr. O'Callaghan's term, synergies have to be realized.

The educational publishing materials whale that Barry O'Callaghan created is deep in debt, but it has a chance of surviving. No thanks to the Irish boy wonder, but it's the people who work in the cubicles at HMH that are keeping the place afloat.

The downside to all that effort is a respectable prospectus, and the sharks circling Mr. Paulson's hedge fund investments are hungry for choice bits of chum that are about to be pitched over the side to keep Mr. Paulson from sinking.

God help the employees of HMH.

Once again, their futures are in turmoil as they await the outcome. HMH could be sold for parts. It could be sold as a going venture, perhaps picked up by another hedge fund with an interest in educational materials. Paulson may hold on to the company, hoping that it can generate revenues to finance his mistakes. There's no predicting the ultimate outcome.

Not a pleasant scenario when you'd like to know for certain that you'll be able to pay your mortgage and put food on the table in the near future.


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