Recorded Books Not for Sale…for Now

by Jim Milliot -- Publishers Weekly, 8/21/2008 10:53:00 AM

In a conference call with analysts discussing its second quarter results, Haights Cross Communications president Paul Crecca said that “at this time” there are no plans to revive the sale process for Recorded Books or HCC’s test-prep publisher Triumph Learning. HCC had put the two companies on the block earlier this year, but suspended the sale at the end of June to allow HCC to focus on refinancing its loan. That refinancing was completed August 15, but Crecca said the timing to reopen the sale process will largely depend on the condition of the capital markets.

The company is also reviewing its options for Sundance/Newbridge, its supplemental publishing subsidiary. HCC began “winding down the business” earlier this year and had been in negotiations to sell the publisher’s assets, but no deal was reached. The failure to complete the sale prompted Rowman & Littlefield Publishing Group to file a lawsuit earlier this month claiming that HCC broke an agreement to sell the publisher to RLPG. According to Crecca, the two parties only had a nonbinding letter of intent and that no definitive agreement was ever reached. Crecca said HCC will vigorously defend the suit, which asks for $20 million in damages.

At the operating level, sales at Recorded Books rose 5.3%, to $23.6 million, in the second quarter as higher sales to the school and library channel offset slightly lower retail sales. Quarterly EBITDA rose 21%, to $8.1 million. For the first half of the year, EBITDA rose 9.5%, to $14.9 million on a sales increase of 4.4% sales increase, to $44.8 million.