N&O's McClatchy Co. slides closer to the edge

Considering their company's share price has crashed from the mid-70s to penny stock status in less than five years, execs at McClatchy Co., the news chain which owns the liberal/leftist Raleigh News & Observer, are sure upbeat.

But information-technology exec Alan Mutter, a former journalist, isn’t at all upbeat about McClatchy which he sees as likely to default on its debt obligations:

The publishers most likely to be unable to satisfy the terms of their debt are MediaNews Group and Morris Publishing, according to the latest ratings from Moody’s Investors Services, a company hired by borrowers to gauge their likely ability to repay their debt. . . .

After those two publishers, the newspaper company next most likely to default is McClatchy, according to Standard and Poor’s, a competitor of Moody’s.

S&P, which uses a different nomenclature than Moody’s, scores MNI’s debt at CCC, which is one notch higher than the MediaNews and Morris ratings. A CCC rating indicates a 48.3% chance of default.

Although the bond rating agencies usually come out fairly closely on a company’s rating, McClatchy gets a far better score from Moody’s than from S&P. Moody’s rates MNI at Ba2, which indicates only a 7.5% chance of default. McClatchy has renegotiated the terms of loans due in the second half of this year.

While Moody’s believes the company to be able to comply with the new terms of the obligations, the ratings by S&P and Fitch, yet a third rating service, suggest a considerably higher level of doubt. . . .

Mutter’s entire post’s here.

A week or so ago JinC Regular Ken in Dallas commented:

There is zero chance that McClathy will ever be able to repay the $2 billion in debt they have accumulated. The markets have already confirmed this with their share price.

They'll hang on for a while like a beggar waiting for the last handout of the day. Then they'll disappear silently into the night.

Good riddance.

With each passing month, despite the “rah-rahs” from McClatchy execs and news editors, sensible people are recognizing the obvious: McClatchy’s headed for bankruptcy.

In case anyone's wondering why Ken and many of us would say good riddance to the kind of journalism McClatchy & the N&O have foisted on the public, here's an Anon comment I've taken from the same thread as Ken's comments:

Never forget the N&O's inflammatory coverage of the lacrosse players in 2006. The newspaper libeled the falsely accused players as well as the entire team and cast the lacrosse players in a false light.

To this day, publisher Quarles has not apologized for the infamous Khanna-Blythe story or for other Nifong-driven coverage. Shame.

Hat tip: McClatchy Watch