McClatchy Stock Soars on Better Ad Revenue, Easing Debt Worries

By: Mark Fitzgerald

Shares of The McClatchy Co. soared on New York Stock Exchange trading Wednesday, pushed by better-than-expected fourth-quarter results and that announcement of a refinancing that eased worries about its debt burden.

Minutes after the opening bell, McClatchy, which trades under the symbol MNI, was priced at $6.25, up $1.16, or 26%. That is the highest price the stock has fetched since July 1, 2008. In the last 52 weeks, McClatchy has traded as low as 35 cents a share.

McClatchy said it reached agreement with its lenders to roll over some of its $1.95 billion in debt.

Lenders approved the issuing of $875 million of senior secured refinancing debt to refinance a portion of its bank debt and some of its existing public bonds that mature in 2011 and 2014. Maturities on remaining debt will be extended from June 27, 2011 to July 1, 2013.

Specifically, McClatchy is issuing $875 million of senior secured refinancing debt to pay back $614 million in bank debt, plus $166 million in notes due next July and $24 million in notes coming due in 2014.

CFO Pat Talamantes said the company finished the quarter with debt principal outstanding of $1.95 billion, down more than $174 million from the end of 2008.

Under terms of the amendment, McClatchy’s leverage ratio — roughly the ratio of debt to EBITDA (earnings before interest, taxes, depreciation and amortization) — will tighten to a maximum of 6.75 to 1 through the rest of the year.

The leverage ratio had been 7 to 1, but Talamantes’ comments in announcing fourth-quarter results indicated the company is well within either limit. The leverage ratio at the end of the fourth quarter was 5.26 to 1, he said.

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