Gannett Sells Bonds, Gets Credit

By: Lucia Moses

Taking advantage of low interest rates, Gannett Co. Inc. said it is assuming new long-term debt to repay short-term debt, while entering a new revolving credit agreement.

Gannett is selling $1.8 billion in unsecured global notes at a weighted average interest rate of 5.56%. The company currently has about $4.82 billion in outstanding debt, much of it short term, at a rate of less than 3%, stemming mostly from the 2000 acquisitions of Central Newspapers Inc., several Thomson Newspapers units, and the U.K.’s News Communications & Media PLC (Newscom).

Gannett entered into a new $2.75-billion revolving-credit agreement to replace one that was due to expire.

“They’re also preparing to be ready, if consolidation … starts, and they see some opportunities to buy,” said Mark D. Henderson, an analyst at ABN Amro.

Gannett is expected to acquire additional newspapers and possibly broadcast properties, either through purchase or trade. If federal media cross-ownership rules are lifted, plenty of deal possibilities would arise.

Company spokeswoman Tara Connell said it’s unlikely that Gannett would dip into its new credit line to fund a major purchase, however.

Standard & Poor’s assigned its single “A” senior unsecured debt rating to the notes and affirmed its other ratings on Gannett. S&P said the ratings reflect the expectation that Gannett’s financials will continue to improve and that it will pursue acquisitions long term.

After adjusting for the new sale of notes, Merrill Lynch revised its 2002 earnings outlook for Gannett to a range of $4.15 to $4.20 from a range of $4.45 to $4.50.

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