The McClatchy Co.'s credit rating was downgraded again today. Standard & Poor's Ratings Services lowered The Bee's owner one notch to "B" from "B-plus."
The downgrade was a reaction to Sacramento-based McClatchy's announcement Friday that it had renegotiated its bank loans to provide more breathing room for the publisher.
Although investors seemed to welcome the news, S&P said the new bank deal is a sign of just how quickly McClatchy's cash flow is falling. The downgrade "reflects prospects for more meaningful decline in revenue and (cash flow) in McClatchy's newspaper publishing business over the intermediate term than we had previously expected," S&P said.
Lower credit ratings can translate into higher interest costs, but company Treasurer Elaine Lintecum said McClatchy's interest payments won't increase as a result of the S&P downgrade.
The latest downgrade takes McClatchy deeper into non-investment-grade, or junk-bond, territory.
"We are sorry that S&P made the move," Lintecum said. "The company is still generating substantial cash flows" and remains on track to lower its debt load to $2 billion by year's end.
She said she believes S&P was influenced at least partly by heightened fears about the economy as Congress wrestles with the Wall Street rescue plan.
The downgrade was announced after the stock market closed. McClatchy shares closed at $4.58, up 8 cents, on the New York Stock Exchange.
Call The Bee's Dale Kasler, (916) 321-1066.
