Business News

McClatchy Announces Amendment to Bank Credit Agreement

Friday 22. May 2009 - The McClatchy Company (NYSE: MNI) announced that yesterday it entered into an amendment to its $1.150 billion bank credit facility which, among other things, allows it to use its revolving credit facility for up to $60 million to repurchase its 7.125% Notes due June 1, 2011 or its 4.625% Notes due November 1, 2014, subject to certain conditions.

The cash may also be used in connection with a debt exchange offer so long as any new notes issued in such an offer have a stated maturity of no earlier than July 1, 2014. As of May 20, 2009, McClatchy had $140.8 million available under its credit facilities. McClatchy today separately announced a private exchange offer to exchange certain outstanding notes and debentures for a combination of cash and new debt securities.
Pat Talamantes, McClatchy’s chief financial officer, said, “In addition to the outstanding efforts made by our papers to weather this downturn, we believe that being able to have more flexibility in the use of our revolving credit facility will allow us to put the company in a stronger financial position to manage our capital structure through this downturn. This enhanced flexibility is clearly a positive development.”

Among other things, the amended Credit Agreement:

— Allows the company to use its revolving credit facility for up to $60
million to repurchase its 7.125% Notes due June 1, 2011 or its 4.625%
Notes due November 1, 2014, subject to certain conditions.
— Implements a reduction in the revolving credit commitment now totaling
$600 million to $560 million (to a total facility of $1.1 billion) in
increments through December 31, 2009; and a further reduction of $10
million through June 30, 2010. The final maturity of the revolving
credit commitment and the term loan remains June 27, 2011.
— Increases pricing on all outstanding loans to interest at the London
Interbank Offered Rate (LIBOR) plus a spread ranging from 325 basis
points to 475 basis points, based upon the total leverage ratio.
Interest will increase by 50 basis points to LIBOR plus 400 basis points
when leverage is between 5.0 and 6.0 times. As of March 29, 2009, the
company’s leverage ratio, as defined, was 5.90 to 1.00.
— Amends the requirements for mandatory prepayments from certain sources
of cash and further limits the payment of dividends, repurchases of
stock and the ability to retire those bonds that come due after 2011.