McClatchy repurchases $30 million of debt during fourth quarter

By Jennifer Lanning Drey

Portland, Ore., Feb. 5 - McClatchy Co. used cash from operations and proceeds from asset sales to repay $30 million of debt during the fourth quarter, Gary Pruitt, chief executive officer of McClatchy, said Thursday during the company's fourth-quarter earnings conference call.

The fourth-quarter repayment brought total debt reduction in 2008 to $433 million.

McClatchy ended 2008 with total debt of $2.038 billion, down from $2.471 billion at the end of 2007.

The company is taking actions toward further debt reduction, including suspending its quarterly dividend to preserve cash after paying the first-quarter dividend, he said.

McClatchy's next significant maturity is its 7 1/8% notes maturing in June 2011.

"June of 2011 in this market is a long way away, and so compared to other companies that are out there dealing with maturities in 2009, we're feeling pretty good about that, and we're working as hard as we can to see if we can't reduce the amount that matures in 2011," Patrick J. Talamantes, chief financial officer of McClatchy, said during the call.

The company also continues to look for opportunities to sell non-core assets to raise cash but has found the market for potential asset sales to be weak.

Revenues drop 18%

McClatchy posted a net loss of $21.7 million in the fourth quarter, while revenues were $470.9 million, down nearly 18%.

"Our results reflect the continuing economic downturn that all businesses are facing. We continue to respond to the recession by reducing costs and intensifying our pursuit of new revenue opportunities," Pruitt said.

During the fourth quarter, McClatchy reduced cash operating expenses by 14.4%, excluding severance costs.

In addition, the company is developing a plan to reduce costs by an additional $100 million to $110 million over the next 12 months. The new cost initiatives, combined with the company's 2008 efforts, are designed to save about $300 million annually before severance costs.

McClatchy is a Sacramento, Calif.-based newspaper company.

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