By Dale Kasler
Feb. 12, 2010
The McClatchy Co.'s credit ratings were raised Thursday as The Bee's publisher moved a step closer to refinancing much of its debt.
Moody's Investors Service and Standard & Poor's Ratings Services said the upgrades reflect the success of the refinance, which buys the Sacramento newspaper chain some breathing room as it copes with the recession and a slide in advertising sales. S&P also noted the ad revenue slump is easing.
The upgrades came moments after McClatchy announced that it had completed its $875 million bond sale, a major piece of the refinance package.
The proceeds of the bond sale are being used to retire some existing bond and bank debts that were coming due over the next four years.
Before the refinance, about $1 billion in debt was due in mid-2011. With the refinance in place, only about $91 million is due then, although additional sums are due in 2013 and 2014.
The total debt of $1.96 billion doesn't change, but a good portion of McClatchy's loan maturity has been pushed back to 2017, when the just-sold bonds are due.
That represents a "significant extension of the company's maturity profile," according to S&P.
S&P raised McClatchy's credit rating to "B-minus" from "CC." Moody's raised it to Caa1 from Caa2. Despite the upgrade, McClatchy remains in non-investment grade, or junk-bond, status.
McClatchy stock closed at $4.69, up 3 cents, on the New York Stock Exchange.