• Reuters, Friday, May 22, 2009 9:46 AM

McClatchy is changing key aspects of its debt agreements in a bid to stay afloat. The publisher of The Miami Herald, Sacramento Bee, and more than two dozen other U.S. newspapers is planning to exchange $1.15 billion worth of existing debt for cash and new debt.

The new debt comes with a higher interest rate of 15.75%, versus about 5%-7%, on existing obligations, but allows the publisher to pay it off several years later. McClatchy also will be able to use its revolving credit line for up to $60 million to pay off some debt, the company says.

The moves give McClatchy flexibility to pay off more than $2 billion in debt related to its purchase of Knight Ridder in 2006. "Before this, I would have thought they were high on the list of [newspaper publishers] not making it. But they moved down the list a little bit," says Benchmark analyst Edward Atorino. McClatchy's shares have lost more than 90% of their value in the past 12 months.

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