Newspaper publishing company The McClatchy Company (NYSE: MNI) says it will work further to trim its debt holdings and increase value for its shareholders. The company's stock--trading poorly--is in danger of being delisted from the New York Stock Exchange, its second such warning within a six-month period.
McClatchy has been dealing with a loss in print sales and is placing more efforts on its digital platforms. The company’s fourth quarter 2015 results shows total revenues of $292.8 million, a 7.8 percent decline compared to the fourth quarter of 2014. It also suffered from a decline in print advertising, with revenues also down for the final quarter of 2015. Gross ad sales totaling $292.8 million, representing an 11.7 percent decline when weighed against revenues recorded one year earlier. It reported a 14.3 percent increase for 4Q15, however, compared to a 4.9 percent increase during 4Q14.
McClatchy, headquartered in Sacramento, California, has $906.5 million in debt outstanding. It recently completed several bond buybacks, repurchasing $20.8 million of its 5.75 percent senior notes due 2017 and $10 million of its 9 percent senior notes due 2022. McClatchy repurchased $95 million of its debt during the fourth quarter. In August, it launched a stock repurchase program for up to $15 million of the company’s Class A shares through 2016
McClatchy’s CFO Elaine Lintecum says that with the exception of a nearing 2017 debt maturity, the company does not have any additional bonds due to mature for the next six years.
“As this transaction demonstrates, we remain committed to reducing debt and interest and creating leveraged equity returns for our shareholders,” Lintecum notes in a Feb. 19 statement. “Our next debt maturity date is in 2017 and is approximately $35 million, and we have no other maturities due until the end of 2022. This manageable maturity runway provides us with the necessary flexibility to accomplish our operational goals and objectives.”
The debt has been trading mixed in the secondary market. On Feb. 23, McClatchy’s 7.5 percent bond due 2027 received a bid of 54.5 cents on the dollar, says financial data company Markit. That same day, investors offered 51.5 cents on the dollar for the 6.875 percent notes due 2029. Buyer’s appetites for the bonds with the nearing maturities are healthier. On Feb. 23, the 5.75 percent notes and 9 percent notes, both recently part of the companies buybacks, received bids of 97.5 cents on the dollar and 86.75 cents on the dollar, respectively.
Despite its efforts to lighten its balance sheet, McClatchy’s stock has been struggling. On Feb. 16, the company was notified that its common stock had closed at under $1.00 per share over a consecutive 30-day trading period, meaning the stock was not in compliance. It received a similar notice in August 2015.
McClatchy can regain compliance if during the six-month period following the notification, on the final day of the trading month, the stock has a 30-day average closing price above $1.00. The stock was at $1.10 at close of trading on Feb. 25.
When contacted, the company declined to comment beyond the Feb. 19 statement, which says it “intends to cure the price deficiency and return to compliance.”
McClatchy’s brands include The Miami Herald,The Kansas City Star, The Fort Worth Star-Telegram and The Sacramento Bee. Following the 2006 purchase of Knight-Ridder, the company sold 11 of the acquired newspapers.