Few take up McClatchy debt exchange offer

SACRAMENTO, Calif., — The McClatchy Co.’s offer to exchange debt for a fraction of its value met a 9 percent acceptance rate, the newspaper publisher said Friday.

The Sacramento-based company had hoped to exchange $1.15 billion in debt for $60 million in cash and $175 million in new notes to reduce its debt load in the face of a severe decline in advertising revenue.

When the offer expired Thursday, $103 million in debt had been tendered, McClatchy said.

The company will exchange the tendered notes for $3.4 million in cash and $24.2 million in new notes.

Standard & Poor’s Ratings Service had rated the new notes at CCC-, far below investment grade, saying that the exchange was tantamount to a default.

Fitch Ratings on Friday said it registered the end of the tender offer as a partial default, because McClatchy was offering only a fraction of the face value of the existing notes, and the new notes will be subordinated to other claims in a bankruptcy. The ratings agency has McClatchy at a “C” rating, meaning it believes another default is imminent or inevitable.

McClatchy shares fell 22 cents to close at 46 cents Friday.

McClatchy publishes The Miami Herald and 29 other daily newspapers.