Standard & Poor's Ratings Services on Friday slashed its corporate credit rating on newspaper publisher McClatchy Co. four notches deeper into junk territory after the company offered to buy back $1.15 billion in debt at a fraction of face value.
The ratings agency cut the corporate credit rating and secured debt rating to CC from CCC+, a four-level downgrade to just three steps away from a default rating. The outlook for the corporate credit rating is negative.
On Thursday, McClatchy said it is asking its lenders to forgive a significant amount of debt.
The company is offering to pay $60 million in cash and issue $175 million in new notes, with a 15.75 percent interest rate, to replace $1.15 billion in debt owed to its bondholders.
Assuming McClatchy will be able to pay back the $175 million in new notes when they come due in 2014, the Sacramento-based company would be paying the bondholders about 20 cents on the dollar.