How can McClatchy stay afloat when the company has less revenue to deal with more financial obligations?
The McClatchy Co. could face a new cash-flow pinch in the next few years as it accelerates funding of its pension obligations, Fitch Ratings said Monday. According to Fitch’s analysis, The McClatchy Co., along with debt-encumbered amusement park operator Six FlagsInc., top the list of media/entertainment sectors who have the highest percentage of “funds flow from operations” (FFO, or, roughly, cash flow) that it will have to allocate to pension contributions over the next few years.
“Six Flags’ overleveraged balance sheet and the secular challenges faced by McClatchy could make it difficult for these firms to meet PPA (Pension Protection Act of 2006) requirements based on our assumptions,” Fitch said in a special report on the effect that pension funding will have on cash flow and credit ratings.
McClatchy has already been impacted by its low credit rating, which Fitch has assigned deep in “junk bond” territory with a “negative outlook” suggesting further downgrades. Lower credit ratings drive up the cost of borrowing for a company and can affect whether certain banks and other institutions are allowed to buy its stock.
The obvious question: How can McClatchy meet additional funding requirements when the company's revenue is dropping?
.
Related:
Lee Communications suspends 401k contributions
No comments:
Post a Comment