S&P may cut MediaNews

Standard & Poor's said it placed MediaNews Group Inc.'s B corporate credit rating on CreditWatch with negative implications.

The watch reflects ongoing concerns about operating trends in the newspaper sector, which could drive EBITDA declines for newspaper companies in 2008, according to S&P.

Lower EBITDA could lead to a violation of the leverage covenant in its bank agreement, the agency said.

Total leverage was 6.53 times as of December, compared with the 6.75 times total leverage covenant at December, which steps down to 6.5 times on June 30 and to 6.25 times on Sept. 30, 2008. There is also limited cushion in the company's 4.25 times senior leverage covenants, the agency said.

As a result, MediaNews could tolerate only a limited amount of deterioration in its cash flow generation over the next few quarters, S&P noted.

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