Moody's cuts Knight Ridder to junk

Moody's Investors Service said it lowered Knight Ridder's bond ratings to Ba1 from Baa3 and assigned a Ba1 corporate family rating.

The commercial paper rating was lowered to Not Prime from Prime-3, the agency said.

The outlook is stable.

The rating actions reflect that the combined company of McClatchy and Knight Ridder will have debt-to-free cash flow and debt-to-EBITDA leverage consistent with speculative-grade levels upon completion of the acquisition, Moody's said, noting it expects debt-to-free cash flow to remain at levels between 11 times and 15 times over the intermediate term despite the company's plans to reduce debt from divestitures and cash from operations.

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