Moody's Downgrades Knight Ridder, McClatchy Ratings

Posted Wednesday, March 29, 2006 12:00 am

By: E&P Staff Moody's Investors Service cut its debt ratings on Knight Ridder Inc. and McClatchy Co. Wednesday and indicated that they may both be further downgraded to junk status due to a debt increase after the recent sale of Knight Ridder to McClatchy.

Earlier this month McClatchy agreed to purchase Knight Ridder for $4.5 billion. The company will assume $2 billion of Knight Ridder's debt and will further borrow $3.75 billion to execute the deal.

Knight Ridder and McClatchy were both given Moody's "Baa3" rating, the service's lowest investment-grade rating.

Moody's said that a "significant increase in leverage" from the partially debt-financed transaction were what caused the ratings cuts.

Whether the companies will be downgraded again by Moody's will depend on debt levels after the completion of the transaction, as well as the new company's diversification and business prospects.

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Moody's Downgrades Knight Ridder, McClatchy Ratings

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