The McClatchy Company (NYSE: MNI), like just about every other newspaper publisher, has found itself even more squeezed by the current economic convulsions. On Friday, the Sacramento company announced it has renegotiated $1.175 billion of debt, which includes banks loans and available lines of credit. While the company insisted it was in no danger of default, it needed to amend its debt agreements to alleviate the pressure from falling ad revenues, particularly in its California and Florida markets. But as the company’s SacBee points out, McClatchy will be faced with higher interest rates — about 25 percent extra — and the amount of credit it can access has been reduced. Ultimately, McClatchy’s borrowing costs could increase by $11 million annually, treasurer Elaine Lintecum told SacBee.
This is McClatchy’s latest in a series of moves to better manage through this difficult period for newspapers. The company has gone through two major layoff rounds this year and has frozen wages. Aside from the wider economic pain, the publisher is still trying to deal with the $2 billion in debt left over from its purchase of Knight Ridder two years ago. The change in its debt agreements was greeted positively in the market, as McClatchy’s stock closed up 25 cents on the NYSE to end the week at $4.50 — still way down from its once $21 stock price. Morningstar analyst Tom Corbett tells SacBee that with a debt load as heavy as McClatchy’s, the company needs all the flexibility it can get. With this deal, Corbett says, “The tourniquet is not quite as tight.”