Moody's may cut Gannett

Moody's Investors Service said it placed Gannett Co., Inc.'s Ba1 corporate family rating, Ba1 probability of default rating and Ba2 senior unsecured note ratings on review for possible downgrade and lowered the speculative-grade liquidity rating to SGL-4 from SGL-3.

The review and reduction in the SGL rating reflect Moody's expectation, based on the rating agency's projected decline in Gannett's advertising revenue and EBITDA, that Gannett may be required to amend the 3.5x maximum senior debt-to-EBITDA covenant in its bank credit facilities by the end of 2009 to avoid a covenant violation. Moody's is also concerned that Gannett may not be able to sustain free cash-to-debt (about 13% LTM 3/29/09 incorporating Moody's standard adjustments and the 90% dividend reduction) above the 8% level anticipated in the Ba1 CFR.

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