O’Callaghan leaves education group

BARRY O’CALLAGHAN, the former investment banker, has resigned as chief executive of global education firm, Houghton Mifflin Harcourt.

In January last year, the group was forced to renegotiated its €5 billion debt, but Mr O’Callaghan, who had built up the company out of publishing house Riverdeep, held on to his job at the time.

Irish investors are estimated to have lost up to €500 million in the restructuring.

Mr O’Callaghan accounted for nearly half that amount and he admitted his 20% stakeholding in the multinational based group had been wiped out.

Michael Muldowney, HMH’s chief financial officer, has stepped in as interim chief executive while the board, now controlled by lenders including Paulson & Co, seek an external appointee to take the post.

HMH makes most of its money in the US schools market and competes head on with Pearson, the educational publisher and owner of Penguin and the Financial Times.

Mr O’Callaghan has been asked to remain on by the board in an advisory role.

At the time, the funding crisis erupted in January 2010, the group’s stock market value was cut in half.

Mr O’Callaghan blamed the global downturn, and it was that change in value that left shareholders in Ireland totally exposed, he said.

When the restructuring was announced, Mr O’Callaghan said the changes in the investment climate in the end represented “one of bad timing for myself and the other shareholders”. While they have lost everything there is no question of the company going under, he said.

One of the underlying difficulties for the group was that the former investment banker from Cork used bank debt to drive the company’s growth.

His departure brings an end to a high-profile career that saw Mr O’Callaghan use Riverdeep to carry out massive debt-driven reverse takeovers of Houghton Mifflin and Reed Elsevier’s Harcourt arm, which became the basis of his publishing empire.