Gannett Offers Higher Interest in Debt Exchange

Swap takes due date out four more years
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McLEAN, VA.: Gannett said it has commenced a private exchange offer for $200 million in notes due in 2011 and 2012. The media company is offering to swap $1,000 in new 10 percent senior notes due 2015 for an equal sum of 5.75 percent notes due 2011. For every $1,000 of its 6.375 percent notes due 2012, Gannett (NYSE: GCI) will issue 10 percent senior notes due 2016.
Both are conditional on GCI receiving $100 million for each offer. Both swaps also include a $30 early participation fee included in the principal amount. The early participation deadline is 5 p.m. EST April 21.

The exchange offer is being made only to qualified institutional buyers and certain non-U.S. investors outside the United States. Valid tenders of the old notes will trigger cash payment of the accrued, unpaid interest. The deadline of the exchange offer itself is 5 p.m. EST May 5 unless extended. The new notes will be senior unsecured obligations and will be guaranteed by GCI subsidiaries.

GCI’s debt is 3.6 times equity. Moody’s Investor Service dropped Gannett’s debt rating to junk status in February on concerns the mostly newspaper media empire wouldn’t be able to manage it. Standard & Poor’s did likewise in early March. The company has been imposing pay cuts and furloughs to keep going after a net loss of $6.6 billion for 2008, including extensive write-downs.

GCI was trading around $2.75 a share after the debt swap offer was announced, up from around $2.20 on April 1. GCI opened the year at $8 a share and dipped below $2 in March before embarking on the current measured rebound. -- Deborah D. McAdams