By: Mark Fitzgerald
Standard & Poor’s Ratings Services joined Moody’s Investors Services in raising its outlook on Gannett Co. Wednesday, following the USA Today parent’s announcement that it had renegotiated its revolving credit facilities and was offering $500 million in bonds. Unlike Moody’s, which upped its outlook to “stable” from “negative,” S&P suggested a rating upgrade could be in Gannett’s future by assigning a “positive” outlook.
S&P did not immediately raise its corporate rating of BB, which is below investment grade. S&P assigned a BB rating to the $250 million senior notes due 2015 and $250 million senior notes due 2018 that were announced by Gannett earlier in the day.
Moody’s Investors Service changed Gannett Co.’s rating outlook to stable from negative on Wednesday following the newspaper and broadcaster’s announcement that it had renegotiated its revolving credit facilities and was offering $500 million in bonds.
The previous negative outlook suggested Moody’s might lower Gannett’s credit rating.
Moody’s assigned a Baa3 rating to Gannett’s proposed $500 million guaranteed senior unsecured notes due 2015 and 2018. The rating is its lowest investment-grade rating.
Gannett’s “corporate family rating” of Ba1, Moody’s highest speculative-grade, or “junk,” rating was unchanged.
“The change to a stable rating outlook reflects Moody’s view that the proposed transactions meaningfully reduce refinancing risk over the intermediate term as Gannett plans to utilize the proceeds to reduce its term loan and revolver borrowings, and extend the expiration date on $1.14 billion of its revolving credit commitments to September 2014 from March 2012,” Moody’s Senior Credit Officer John Puchalla said in a note to investors. “Gannett has traditionally utilized a high proportion of shorter-term debt, but is taking steps to term out maturities and reduce the amount falling due in any one year. Moody’s believes a longer and more laddered maturity profile diminishes annual debt repayment needs, better matches the tenor of Gannett’s assets and is more manageable within cash, projected free cash flow, and unused revolver capacity.”
Gannett Co. said Wednesday it has commitments from lenders to extend the maturity date of its revolving credit agreements from March 15, 2012 to September 30, 2014.
The nation’s largest newspaper publisher also announced that it intends to offer $250 million of senior notes due 2015 and $250 million of senior notes due 2018 in a private offering to institutional buyers. The notes will be guaranteed on a senior basis by the subsidiaries of the company that guarantee its revolving credit facilities and term loan, Gannett said.
“The company intends to use the net proceeds from the offering to repay borrowings outstanding under its revolving credit facilities and term loan,” Gannett said.
Under the amended revolving credit agreements, total commitments are expected to be $1.63 billion through March 15, 2012, and $1.14 billion from March 15, 2012 to September 30, 2014.
The company also announced that it recently amended its existing revolving credit agreements and term loan agreement to permit the issuance of up to $750 million of additional indebtedness guaranteed by its subsidiary guarantors.
“We are pleased with the response from our lenders and their confidence in us. Successfully amending and extending the maturity date on our revolving credit facilities provides us with significant financial flexibility as we continue to position Gannett for the future,” Gannett President, COO and CFO Gracia C. Martore said in a statement.