Moody's cuts some McClatchy ratings

Moody's Investors Service said it downgraded McClatchy Co.'s probability-of-default rating to Caa3 from Caa1.

The action follows the company's private offer to exchange up to $1.15 billion of outstanding senior unsecured and unguaranteed notes and debentures for up to $60 million in cash and up to $175 million of new 15.75% senior unsecured guaranteed notes due 2014, according to the agency.

Moody's also downgraded the company's senior unsecured notes due 2011 to Ca (LGD4, 67%) from Caa2 (LGD5, 75%), senior unsecured notes due 2014 and 2017 to C (LGD5, 73%) from Caa2 (LGD5, 75%) and senior unsecured notes due 2027 and 2029 to C (LGD5, 74%) from Caa2 (LGD5, 75%).

The downgrades reflects the expected loss from the exchange offer and the high near term probability of default.

The Caa1 corporate family rating is unchanged.

The outlook is negative.

Moody's said the downgrade of the probability-of-default rating reflects the view that McClatchy's proposed exchange offer will constitute a distressed exchange if completed.

The issuer's debt-to-EBITDA leverage would remain very high at 7.5 to 8x, the agency said.

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