EMPG, the schoolbook publisher formed by Cork-born Barry O'Callaghan, is a "good company with a bad balance sheet", according to its chief financial officer Michael Muldowney.

"The capital structure in place was wrong," Muldowney said, adding he was confident a debt-for-equity swap with all of its lenders will be sealed soon.

Muldowney said EMPG's revenue last year fell about 20%, which was in line with the industry average. The revenue slump cut its earnings resulting in a breach of banking covenants.

The restructuring will cut EMPG's crippling interest bill by 70%. The debt-for-equity swap will reduce EMPG's borrowings to $3bn. The company will also get $600m in fresh equity as part of the deal. EMPG built up a $7bn debt after a series of borrowing-fuelled takeovers. In 2006 O'Callaghan bought Houghton Mifflin for $3.4bn and followed that just months later with the $4bn purchase of Harcourt, a US schoolbook publisher.

The balance sheet restructuring will wipe out the holdings of its Irish investors, including O'Callaghan who was once its biggest shareholder.