By: The Associated Press McClatchy Co. shares tumbled Friday along with the broader market after the newspaper publisher agreed to pay steep interest rates to push back its deadline for repaying debt.
The stock fell 51 cents, or 10 percent, to $4.51 in afternoon trading. It has fallen as low as 35 cents in the past year as investors worried about its ability to pay off borrowings.
After the market closed Thursday, McClatchy priced $875 million in new bonds due in 2017. It is selling the notes at 98.824 percent of face value with an interest rate of 11.5 percent.
The company, which publishes The Miami Herald and 20 other dailies, is using the proceeds to buy back older debt. It was paying 7.125 percent interest on $166 million due in 2011 and 15.75 percent on $24 million due in 2014.
Overall, the refinancing is a positive for McClatchy despite the high cost of borrowing, said Shelly Lombard, an analyst with Gimme Credit. She said the company would have struggled to pay off the $166 million due next year. But she said the McClatchy's stock is likely to remain volatile because of the uncertain long-range outlook for newspapers, which continue to lose advertising dollars to competition on the Web.
"This stock is going to be a cha-cha," she said. "A step up and two steps back."
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