By: Mark Fitzgerald
Moody?s Investors Service late Thursday assigned a relatively high, but still speculative-grade or ?junk? credit rating, to Media General Inc.?s offering of $350 million in senior secured notes that will be used to pay down debt.
Moody?s, one of the big three credit rating agencies, stopped rating Media General debt in May 2007.
Moody?s assigned a B2 ?corporate family rating? (CFR) to Media General, which is five notches below investment grade, and is characterized in Moody?s definition as debt that ?lack characteristics of a desirable investment.?
By way of comparison, after The McClatchy Co. Wednesday said it would issue $875 million in senior secured notes for the same purpose of stretching out maturities and paying debt coming due in 2011, Moody?s said it was reviewing a possible upgrade of the publisher?s CFR from Caa2 to Caa1, ratings below the B category and suggesting ?bonds of poor standing.?
Earlier Thursday, Media General said it ended 2009 with total debt $712 million, down from $730 million at the end of 2008.
Moody?s senior analyst John E. Puchalla said the refinancing ?alleviates the strain from the maturity in 2011 of the prior credit facility, but the maturity profile remains lumpy with about half of the debt due in each of 2013 and 2017.?
He said the higher interest costs on the new bonds will limit Media General?s free cash flow and therefore its ability to reduce debt before the credit facility matures in 2013.
The full note is posted on E&P?s business-oriented Fitz & Jen blog.