Thursday 22 March 2018

The rollercoaster years of Barry O'Callaghan

O'Callaghan spends his twenties in investment banking in London, New York and Asia, working at various times with Credit Suisse and Morgan Stanley. He enters the banking world after studying law in Trinity College, Dublin. O'Callaghan is appointed chief executive of education publisher Riverdeep in 1999 in his early 30s. He works closely with serial IT entrepreneur Pat McDonagh. In 2000, O'Callaghan listed Riverdeep on the Irish stock exchange and on NASDAQ, becoming a poster boy for Ireland's hi-tech economy. The market put a market capitalisation on the company of $2bn. Subsequent to this, O'Callaghan managed and integrated seven other education companies into the Riverdeep structure.

In 2002, Riverdeep went private when a group of investors, including O'Callaghan, completed a major takeover deal, advised by Goodbody Stockbrokers.

  • In 2006, in one of the largest deals ever done by an Irish businessman, O'Callaghan effectively merged Riverdeep with a leading US publisher called Houghton Mifflin Company in a deal worth €3.4bn.

"Riverdeep represents an excellent strategic fit with Houghton Mifflin,'' O'Callaghan said of the deal.

  • In 2008, O'Callaghan was again in deal-making mode, with Houghton Mifflin buying fellow US publisher Harcourt Education for $4bn. This left the holding company behind Houghton Mifflin with a large debt load.
  • By 2008 and 2009 markets were getting nervous about the debt load sitting on the balance sheet of this company, known as EMPG. Ratings agencies in particular were anxious that the company could breach the conditions of its loans.
  • In February 2010, bondholders take radical action at the company, converting 60pc of their debt into equity. One group of senior lenders convert $2bn of secured debt into shares in the company.

Another group of mezzanine lenders convert $2.1bn of debt into shares and share warrants. Separate money comes in from a new set of institutional investors. Existing shareholders are hit hard, including O'Callaghan, with their stakes reduced to "near zero''.

  • In March 2011, O'Callaghan steps down from Houghton Mifflin, as senior shareholders, like hedge fund king John Paulson, tighten their grip on the company. O'Callaghan is given one-year contract to act as an advisor to the company.

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