S&P lowers McClatchy

Standard & Poor's said it lowered McClatchy Co.'s corporate credit rating was lowered to BB- from BB and placed the rating on CreditWatch with negative implications.

The downgrade and watch follow McClatchy's March quarterly earnings release and reflect a worsening pace of decline in advertising revenue at the company's newspaper publications, according to S&P.

The issuer's total lease- and unfunded pension-adjusted debt-to-EBITDA ratio was near 5 times.

S&P said the current rate of revenue and EBITDA declines are not consistent with the agency's expectations at the prior rating. The agency said it is now concerned that leverage may not improve, even factoring in $185 million in cash proceeds from a tax refund that the company expects to receive in the June quarter from its sale of the (Minneapolis) Star Tribune, as well as positive expected free cash flow from operations.

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