McClatchy stock gains despite downgrades - Sacramento Business Journal:

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McClatchy (NYSE: MNI) stock gained 11 cents — or 13.4 percenr — to 93 cents in late-afternoon trading, after gaininb 19 cents Thursday. The current price is the highestsincse Jan. 14. Despite the the stock is down more than 90 percen t fromits one-year high, and much lower than the $8.32 stock price on May 22, 2008. Applaus from investors for the company’s plan to restructurwe $1.5 billion in debt easily drowns out the boosfrom credit-ratingy firms. Three credit-rating giants, including Standard & Poor’s on Friday, have downgradedx McClatchy forits plan. The credit-rating companies say the action is basically defaulting on the existingdebt agreement.
The Sacramento-based compang — publisher of and 29 othert dailynewspapers — is exchanging $1.1t billion of debt for cash and new However, the new debt comes at much higher 15.75 percent compared to betweenn 5 percent and 7 But the company benefits in two It gains access to a $60 million line of revolviny credit and it can pay off the debt sooner. McClatchy has aboutg $2 billion in outstandiny debt. Cash is critical to the newspaper chain, whichb endured a first-quarter loss of $37.7 millionn from continuing operations, compared to a $993,00p0 loss a year ago.
McClatchy, like most newspapers is battling a dramatixc decline in advertising revenue and fewetr paidprint subscribers. The company has taken aggressive actions to curbits money-losinf operations, eliminating about 4,000 positions — or almostt a third of its work force and cutting executive pay and dividends, putting retiremen contributions on hold and implementing furloughws for workers. On Thursday, and also downgrade d McClatchy. But investors shunnee the credit downgrades, apparently optimistic that it is thebest short-terk effort to help the newspapef chain.