By: E&P Staff
The McClatchy Co.’s bonds slid from investment grade into relatively deep junk status as Standard & Poor’s Ratings Services (S&P) downgraded the nation’s third-biggest newspaper chain two steps to “BB-plus.”
S&P’s “BB-plus” rating judges a company’s debt to have “significant speculative characteristics.”
S&P had rated McClatchy bonds an investment grade “BBB,” but last month issued a credit watch and suggested it could downgrade its bonds by one step.
The deeper ratings cut followed McClatchy’s announcement last week that first-quarter profits declined 67%, and that revenues were down 5% on a same-property basis.
The S&P downgrade will increase McClatchy’s interest payment on existing debt by $1.8 million annually, the company’s CFO, Pat Talamantes told its flagship paper, The Sacramento Bee, in an article by staff writer Dale Kasler.
McClatchy took on considerable debt to finance its acquisition last summer of Knight Ridder Inc.
In noon trading on the New York Stock Exchange, McClatchy (MNI) was down 56 cents or 1.88%, at $29.30.