TEXT - S&P says McClatchy Co ratings unchanged following debt change

Tue Dec 4, 2012 2:06pm EST

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Dec 4 - Standard & Poor's Ratings Services said today that its ratings on
Sacramento, Calif.-based The McClatchy Co. (B-/Stable/--) remain
unchanged following a modification of the size of its debt issue. The 'B'
issue-level rating and '2' recovery rating on the company's 9% first-lien senior
secured notes due 2022 remain unchanged following the increase to $910 million
from $750 million.

The company will now use issue proceeds to fund the tender of all of its $846 
million 11.5% senior secured notes due 2017 and related call premium. The 
transaction slightly increases debt leverage, though it extends the bulk of 
2017 maturities and reduces interest expense. Near- to medium-term debt 
maturities are modest, and consist of the $66 million 4.625% debentures due 
November 2014, which we expect will be serviced with discretionary cash flow. 
The company does not have subsequent maturities until 2017, when $286 million 
of debt matures.

The 'B-' rating on The McClatchy Co. reflects our expectation that its 
financial profile will remain "highly leveraged" because of its ongoing 
revenue declines resulting from the shift of news consumption and advertising 
to digital media, and the company's exposure to weak economic conditions. Pro 
forma for the transaction, lease and pension-adjusted total debt to EBITDA, 
adjusted for dividends from minority equity stakes of Internet joint ventures, 
increased to 5.9x from an actual level of 5.4x for the 12 months ended Sept. 
23, 2012. Standard & Poor's anticipates that credit measures will gradually 
deteriorate because of continued secular pressure on the business, despite 
efforts at cost restructuring and development of new digital revenue.

RELATED CRITERIA AND RESEARCH
     -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
     -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
     -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
     -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008
 
RATINGS LIST

Ratings Unchanged

The McClatchy Co.
 Corporate Credit Rating                 B-/Stable/--
 Senior Secured
  $910M* first-lien notes due 2022       B
   Recovery Rating                       2

*$160M increase from $750M.
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