By: Mark Fitzgerald Hours after The New York Times Co. released third-quarter results Thursday that including a sliding profit but that beat Wall Street expectations, Moody's Investors Services warned of a possible downgrade into junk territory of the publisher's unsecured debt and commercial paper.
Moody's said it had placed $725 million of Times Co. debt under review for a possible downgrade from its current Baa3 rating, the lowest investment-grade rating.
"(New York) Times' third quarter 2008 operating performance was within the lower end of the range Moody's had anticipated, but weaker expectations for the balance of 2008 and in 2009 and the refinancing risk associated with upcoming debt and committed revolver maturities have prompted Moody's to review the company's ratings," analysts John E. Puchalla and Alexandra S. Parker wrote.
According to Moody's, the Times Co. has about $430 million of cumulative debt coming mature through March 2010, including $150 million due in the next 13 months. And next May, $400 million of its $800 million of committed revolver capacity will expire, Moody's said.
"Moody's will consider (New York) Times' ability to return free cash flow generation to meaningfully positive levels during 2009 through the culmination of several significant capital projects, a possible reduction in the dividend, and revenue and cost initiatives," the analysts wrote.
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