[Updated at 3:52 p.m. ET: Moody's credit-rating agency has given its blessing to this new debt offering, according to Editor & Publisher.]
[Updated at 10:30 a.m. ET: Wall Street doesn't like this latest move. Investors are pummeling GCI shares: They've recently traded for $12.47, down 70 cents, or 5.3%.]
Word for word from a statement Gannett just disclosed:
Gannett today announced that it intends to offer $250 million of senior notes due 2015 and $250 million of senior notes due 2018 in a private offering to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and outside the United States in reliance on Regulation S under the Securities Act, subject to market and other conditions. The notes will be guaranteed on a senior basis by the subsidiaries of the Company that guarantee its revolving credit facilities and term loan.
The Company intends to use the net proceeds from the offering to repay borrowings outstanding under its revolving credit facilities and term loan.
In a separate statement, GCI said:
Gannett today announced that it has received signed commitments from the required lenders to extend the maturity date of its existing revolving credit agreements from March 15, 2012 to September 30, 2014. The company expects total commitments under the amended revolving credit agreements to be $1.63 billion through March 15, 2012, and total extended commitments from March 15, 2012 to September 30, 2014 to be $1.14 billion. The amended revolving credit agreements will continue to be guaranteed by all of its subsidiaries that guarantee the obligations under its existing revolving credit agreements, term loan agreement and certain of its notes. Entering into the amended revolving credit agreements is subject to completion of final documentation. The company also announced that it recently amended its existing revolving credit agreements and term loan agreement to permit the issuance of up to $750 million of additional indebtedness guaranteed by its subsidiary guarantors.
"We are pleased with the response from our lenders and their confidence in us. Successfully amending and extending the maturity date on our revolving credit facilities provides us with significant financial flexibility as we continue to position Gannett for the future," said Gracia C. Martore, president, chief operating officer and chief financial officer. "We expect to close the amended credit facilities by the end of the month."
Related: Here's Dow Jones Newswire's story
Earlier: NYT Co. announces adjusted Q3 earnings
Finance pros, weigh in! Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.
Wednesday, September 22, 2010
13 comments:
Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."
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It's hilarious how they're always trying to "position Gannett for the future."
ReplyDeleteI picture a rotund dowager trying to maneuver into her box seat at the opera. Give it up, lady - the lights are up and the show is over. Go home.
Oh yeah, nothing better than paying interest for a longer time as business hits the skids.
ReplyDeleteMartore talking about the "confidence" that bankers have shown in Gannett may be misplaced. It may be that their confidence is based more on the potential of liquifing assets if there's a default than it is on the long-term viability of Gannett.
If Martore is concerned about long-term viability she must concentrate on the quality of the product not on re-working, elongating Gannett's debts.
Default? Please. That is nonsense. GCI is paying down debt at a very good pace. Look, you may not like this company's operators. Some of those operators may have hurt you--they did me. And no one will ever blame GCI the company for displaying more than prudent concern for winning Pulitzer prizes. But making money? They're Pulitzer winners in that category, and that is good for GCI the stock. The market is going bonkers over any less-than-totally positive news these days. Just look at what's happening to the stock of Adobe at this very moment. I will cash out of GCI at $20 plus within a year. Meantime, based on my average cost price, I'm being paid just under 4 percent to wait in the form of a dividend yield. How much is your bank account paying you? Let's update the hoary investing cliche for readers of Gannett Blog: Bulls make money, bears make money, pigs get slaughtered and soreheads just go nowhere,
ReplyDeleteI hope you're right, 11:02 a.m. I really do. But I seriously doubt you're going to see $20 a share. At least any time soon. A renewed consumer confidence is a long way off, possibly a year or more away. And until that's resolved, don't expect huge profits.
ReplyDeleteI'm not a novice in the stock market. I've been investing in stocks for over 40 years. And I wouldn't touch a newspaper stock now or tomorrow or next year. Gannett or any of the others.
Unbelievable 11:02. How is taking on new debt loads possibly "paying down debt at a very good pace." They have just added $750 million plus to the debt, the plus being interest rates cleverly not disclosed in this statement.
ReplyDeleteNo wonder Wall Street is reacting negatively. The one lesson from this recession economists say is that American corporations were much too leveraged -- i.e. had too much debt. For the last two years, companies have been paying down their debt, which is what Gannett was doing until today.
We employees are going to pay for this, big time.
What it boils down to is Gannett is abandoning the news business. It's "re-positioning" in a variety of marketing and consumer-oriented businesses away from news.
ReplyDeleteGannett's executives may be "Pulitizer prize winners" in making money, as a previous poster stated, but it's doubtful the pie will ever be as big as it was in the heyday of the '80s through mid-'90s.
A key issue is how ready the Gannett execs are prepared to accept that. At this point, they're all overpaid, and will remain as such until they PRODUCE SOMETHING OF LASTING VALUE.
Gannett has serious problems unrelated to the economy. For one thing it needs to overhaul a culture where "yes" men and women rise to leadership roles with litttle else to qualify them. Anyone who doubts this, should take a look around the company.
I hope that Gannett executives are also learning or have learned that they can't simply buy their way into the future. They need to create, to innovate. Not just acquire someone else's baby.
Looks like we came close to default to me. Why would they renegotiate the existing debt, and set up these new debt facilities? More debt means lower stock price.
ReplyDeleteIt is clear that Gannett is having trouble paying down their debt on time, so they keep pushing it out. Gracia can spin it anyway she wants, but the model is broken and they do not have a solution for the long term. By the time they have to pay this new extended debt obligation, Gracia, Craig, Dave H, Dave L, Jack W, Roxanne H and Bob Dickey will all be retired!!!
ReplyDeleteSeriously, these guys are holding out for cash. When was the last time you saw anyone of the Gannett officers BUYING Gannett stock? Do you think they actually believe in this company when they are sucking it dry and leaving the debt for the next generation of leaders.
Very clever Gracia, but clearly you and our Chief Strategist Dubow cannot bankrupt this company without paying the price.
Pushing out debt today is not good. The model is broken.
Gosh 11:48 you obviously have no clue how high finance works. Love Gannett or hate it this a stunningly art move. It's business lemmings. Maybe you should take a finance class.
ReplyDeleteI'm no expert when it comes to corporate debt, so correct me if I'm wrong in the following.
ReplyDeleteAs I understand this debt offering and credit agreement extension, Gannett is:
* raising $500 million to pay down existing debt
* extending the maturity of $1.14 billion in a revolving credit agreement by an additional 30 months. (The other, existing $1.63 billion of this "revolver" would not be extended.)
* disclosing that it may issue up to an additional $750 million in notes beyond the $500 million now in the pipeline
Several questions:
1. Will this reduce the company's overall indebtedness, or will it increase?
2. Will this result in a net reduction in interest expenses, assuming the new $500 million in notes pay less than the debt they replace?
3. Will the extended maturity on the $1.14 billion in the revolver result in higher interest expenses, given the additional 30 months until payback time?
4. Was there a risk the company could not have paid back the $1.14 billion without an extension?
5. Does this swapping and extension of debt give the company financial flexibility that's important to future investments?
We can't answer most of your questions because we don't know the interest rate these offerings are carrying. All we do know is Wall Street didn't like something, which goes to your question #4.
ReplyDeleteGannett's high paid investor relations and corporate communications flacks could have saved everyone a lot of arguing about what this debt offering meant if it had been described in plain English instead of some obsfucated release from the CFO.
ReplyDeletePlain English, please, next time?
1:32.
ReplyDeleteGet real. Why would they start now? Corporate can't explain their field trips to Gannett fiefdoms. They can't articulate a compelling plan to Wall Street or advertisers. They can't speak to employees about transformative plans without actually thinking about anything than promoting some executives and letting rank and filers hang in the wind for months and months.
Plain English? How about plain common sense and treating people the way you would like to be treated?