Fitch lifts McClatchy loans, rates notes CCC

Fitch Ratings said it upgraded McClatchy Co.'s issuer default rating to CCC from C, upgraded its senior secured credit facility and term loan to CCC/RR4 from C/RR4, assigned a CCC/RR4 rating to its $875 million 11½% secured notes due 2017 and affirmed its senior unsecured guaranteed notes and senior unsecured notes/debentures at C/RR6.

The ratings were removed from Rating Watch positive. There is no outlook assigned.

The proceeds of the notes are expected to be used to reduce borrowings under the credit facility and fund the company's tender offer for its 7 1/8% notes due 2011 and 15¾% notes due 2014.

The agency said the tender offer will satisfy a significant amount of 2011 maturities and postpone refinancing risk to 2013, providing the company with some headroom to navigate its operational transition.

However, Fitch expects revenue, EBITDA and free cash flow to remain under pressure until print classifieds make up well under 5% of the over-all advertising revenue mix, and although the agency expects the pace of revenue declines to decelerate in the intermediate term, it said the evolution of advertiser behavior and consumer media consumption habits will provide an overhang to operations for the foreseeable future.

Leverage as of Dec. 31 was approximately 6 times.

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