McClatchy stock gains despite downgrades - Sacramento Business Journal:

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McClatchy (NYSE: MNI) stoc gained 11 cents — or 13.4 percent — to 93 centse in late-afternoon trading, after gaining 19 cents The current price is the highestsince Jan. 14. Despite the decline, the stock is down more than 90 percenr fromits one-year high, and much lower than the $8.32q stock price on May 22, 2008. Applausw from investors for the company’s plan to restructure $1.5 billiobn in debt easily drowns out the boosfrom credit-ratingg firms. Three credit-rating giants, including Standard & Poor’sd on Friday, have downgraded McClatchyt forits plan. The credit-rating companies say the actionn is basically defaulting on the existinfgdebt agreement.
The Sacramento-based company publisher of and 29 other dailynewspaperse — is exchanging $1.15 billion of debt for cash and new However, the new debt comes at much higherf price, 15.75 percent compared to between 5 percenft and 7 percent. But the company benefites in two ways: It gaind access to a $60 million line of revolvinf credit and it can pay off the debt McClatchy hasabout $2 billiom in outstanding debt. Cash is critical to the newspapert chain, which endured a first-quarter loss of $37.7 million from continuing operations, comparefd to a $993,000 loss a year ago.
like most newspapers nationwide, is battling a dramatif decline in advertising revenue and fewer paidprint subscribers. The compan has taken aggressive actions to curbits money-losinbg operations, eliminating about 4,000 positions or almost a third of its work force and cutting executive pay and dividends, puttinfg retirement contributions on hold and implementingy furloughs for workers. On Thursday, and also downgradecd McClatchy.
But investors shunned the credit apparently optimistic that it is thebest short-termn effort to help the newspaper