Moody's may up McClatchy, rates notes B1

Moody's Investors Service said it placed McClatchy Co.'s Caa2 corporate family and probability-of-default ratings and Caa3 senior unsecured note ratings on review for upgrade.

In addition, the agency assigned a B1 rating (LGD2, 21%) to McClatchy's proposed $875 million senior secured notes due 2017 and a B1 rating (LGD2, 21%) to the extended portion of its amended credit facility.

The review follows McClatchy's announcement that it has obtained an amendment to extend the maturity on about 90% of its credit facility by two years to July 2013, began the offering for the proposed senior secured notes and launched a tender offer for all of its 7 1/8% notes due 2011 and 15¾% senior unsecured guaranteed notes due 2014 at premiums to par, according to the agency.

Moody's said it expects to upgrade McClatchy's corporate family rating to Caa1 from Caa2 if the refinancing is completed.

The prospective Caa1 corporate family rating reflects the cash flow generated from the company's portfolio of newspapers and online properties tempered by revenue pressure and the company's high leverage, the agency said.

Moody's said the company's debt-to-EBITDA leverage of about 7.7x for fiscal 2009 is unsustainable for the newspaper industry and this creates elevated risk of a restructuring over the long term.

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