LOS ANGELES (Reuters) - Houghton Mifflin Harcourt Publishers Inc has reached a deal with more than 70 percent of its creditors to cut $3.1 billion in debt as it faces a lagging textbook market due to drops in educational funding.

The publisher said it plans to restructure through a pre-packaged, court-supervised Chapter 11 bankruptcy, a process that will have no impact on its day to day operations.

It said the restructuring is likely to be completed by the end of June 2012. The Boston-based publisher said a majority of its senior secured lenders and bondholders agreed to the plan to convert outstanding long-term debt to equity and create a capital structure to support its business objectives.

Houghton said it is now seeking broader lender, bondholder and shareholder support. If its plan were approved, Houghton would eliminate $3.1 billion of debt and reduce current annual cash interest costs by $250 million, providing it with greater liquidity to pursue opportunities in digital, consumer and international markets.

Under the plan, existing equity holders would receive warrants exercisable for up to 5 percent of the equity in the reorganized company.

In addition, Houghton has received a commitment for $500 million in financing from Citigroup Global Markets Inc.

The company's restructuring counsel is Paul, Weiss, Rifkind, Wharton & Garrison LLP and its financial adviser is Blackstone. The lenders' restructuring counsel is Akin Gump Strauss Hauer & Feld LLP and their financial adviser is Houlihan Lokey Capital, Inc.

(Reporting By Susan Zeidler; Editing by Steve Orlofsky)