Moody's and S&P lower ratings on McClatchy

NEW YORK - Standard & Poor's Rating Services and Moody's Investor Services both lowered their corporate ratings of McClatchy Co. on Friday following a debt exchange deal announced by the newspaper publisher.

McClatchy offered last week to exchange $1.15 billion of its debt for a fraction of its value to cope with a severe decline in advertising revenue but met a low acceptance rate. When the offer expired Thursday, $103 million debt had been tendered.

The Sacramento-based company will exchange the tendered notes for $3.4 million in cash and $24.2 million in new notes.

Moody's lowered McClatchy's corporate family rating to "Caa2" from "Caa1" and upgraded its possibility of default rating upon the company's completion of the exchange offer, which would exchange the existing senior unsecured notes for new 15.75 percent senior unsecured guaranteed notes due July 2014.

Moody's said the offer constitutes a distressed exchange and a default. S&P also expressed concern about the exchange at a discount to par value, saying it is tantamount to a default and lowered its corporate credit rating to "SD" from "CC".

McClatchy publishes 30 daily newspapers including the Miami Herald and The Sacramento Bee. Shares of McClatchy rose 4 cents to close at 50 cents Monday but were unchanged in after-hours trading. The price of the company's stock has fallen nearly 94 percent in the past 52 weeks.

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