That's how much the company now says it drew on its revolving credit line -- a drawdown announced Wednesday, the same day Standard & Poor's threatened to cut Gannett's debt ratings.Gannett didn't reveal the dollar amount until yesterday, when it made an 8-K filing with the U.S. Securities and Exchange Commission. The Financial Times notes today that the new loans sent such GCI debt soaring nine times higher -- to a total $1.9 billion. The move demonstrates the "growing rush by businesses to lock in funding" as commercial paper financing markets shut down around them. The British newspaper notes other companies have taken similar steps recently, including Goodyear, General Motors and Duke Energy.
The new borrowing replaces one common source of financing -- so-called commercial paper -- that's grown more scarce amid the banking crisis. Gannett said in a Wednesday statement that the new financing was unrelated to S&P's warning, which could boost the cost of the company's credit if the ratings agency deems GCI's finances more precarious. The company apparently announced the drawdown as a signal to Wall Street that it can still tap short-term financing to cover ordinarily operating expenses: payroll, newsprint purchases, etc.
But I also assume that using credit lines is more costly or less desirable in other ways. Otherwise, why would Gannett ever finance operations with commercial paper?
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Obviously, they needed the money to make their Oct. 1 payments, including other debt payments, etc. If they are in that precarious financial condition, and that sloppy in accounting, I cannot blame S&P from taking a second look and really slashing GCI's credit ratings.
ReplyDeleteThe new loans are being used to pay commercial paper draws, or am I reading the story wrong?
ReplyDeleteDidn't Gannett just pay dividends and buy some stuff?
They need cash for the Xmas bonuses, and that certainly is no longer coming in through the front door. A lot of kiddies of corporate execs will have miserable Xmases this year if there is no bonus money, and God Knows, GCI has done wonderrrfulllly this year.
ReplyDeleteNoticed the SEC documents Duke Energy filed lists specific amounts for specific subsidiaries. Now, I don't pretend to understand accounting, but I've always wondered why Gannett reports don't break out $$$ for subsidiaries or divisions or something.
ReplyDeleteGannett has plenty of cash to meet its obligations. Right now, prices for everything are collapsing. Homes, oil, gold, workers, are all costing less than a few months ago. But with the trillions of dollars the central banks are pouring into the world financial system, prices will skyrocket.
ReplyDeleteIn inflation, it is better to be a debtor than lender, if you have your interest rates under control.
"CHRISTMAS BONUS" wtf is that? I bet if you took a poll on here you would find out that is an endangered species !!!!
ReplyDelete