McClatchy gets lender OK to amend for extended maturities, notes sale

By Sara Rosenberg

New York, Jan. 27 - The McClatchy Co. received lender consent to amend its credit facility to extend maturities, increase pricing and allow for the issuance of notes, according to a news release.

About $184 million of term loan debt and $201 million of revolver commitments are being extended to July 1, 2013 from June 27, 2011.

The amendment provides for at least a 60% commitment reduction and prepayment for all lenders that agreed to extend the maturity of their remaining commitments.

Pricing on all outstanding loans was increased to a range of Libor plus 425 basis points to 575 bps based on total leverage and a 3% Libor floor was added. Initial pricing is Libor plus 500 bps.

And, as a result of the amendment, the company is permitted to sell $875 million of senior secured notes to repay roughly $614 million under its credit agreement and to fund a cash tender offer for any and all of the about $166 million of 7.125% notes due June 1, 2011 and about $24 million of 15.75% senior notes due 2014.

McClatchy expects to have roughly $189 million in revolver availability upon effectiveness of the amendment and the application of the proceeds of the issuance of the senior secured notes.

In addition, the amendment revised the total leverage ratio to a maximum of 6.75 to 1.00 through the quarter ending December 2010, stepping down to 6.50 to 1.00 from the quarter ending in March 2011 through the quarter ending in December 2011, to 6.25 to 1.00 from the quarter ending in March 2012 through the quarter ending in December 2012 and to 6.00 to 1.00 thereafter.

Also, the consolidated interest coverage ratio was decreased to a minimum of 1.50 to 1.00 from the quarter ending in March 2010 through the quarter ending in September 2011, increasing to 1.60 to 1.00 from the quarter ending in December 2011 through the quarter ending in September 2012, and to 1.70 to 1.00 thereafter.

Lenders holding approximately 90% of the total commitments under the credit facility agreed to the amendment.

The amendment will become effective immediately prior to the closing of the senior secured notes offering.

Bank of America is the administrative agent on the deal.

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

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