Gannett: 'lucky to make it to 2011'

Dateline: Sun 28 Jun 2009

Gannett is featured in an online artcle from "The Deal Magazine: voice of the economy", re: Gannett's bad debt.

Writer Richard Morgan of The Deal says:

"Unmentioned (in a recent shareholders' report by former Gannett CEO Al Neuharth) were the moves not made -- moves that could have ensured Gannett's participation in the digital-age boom that Neuharth envisions for the news and information business.

"Although not entirely removed from challenges confronting the industry, these moves would have been specific to the company. They would have conserved capital through a much earlier dividend cut and, more importantly, staggered credit obligations so they fell due within 10 years, say, instead of three.

"As a distressed-debt expert puts it: 'They could have taken their capital structure and pushed maturities so far out into the stratosphere that their debt situation isn't relevant today. And they could have easily done that not very long ago.'

"Now, financial sources contend, it's too late. Because of the credit crisis, an unfortunate bunching of credit maturities and a debilitating number of so-called negative-basis trades featuring credit-default swaps -- all in addition to the industry's secular and cyclical downturns -- Gannett as we know it will be lucky to last through June 2011.

"'They painted themselves into a corner,' the distressed-debt expert says of Gannett management. 'They have to raise more than $400 million between now and the middle of 2011 in a market where, frankly, many of their bondholders would rather they default.'"

Read the entire article at

Perhaps this explains why Gannett refuses to share its financial information with the Guild union at the Indianapolis Star; if the union found out how precarious Gannett's position is, and that info became public, it would likely only hasten the company's unraveling.



hendy [unverified] said:

The message is clear: unless the economy does a radical turn around, get out of Gannett stock quickly. Oh, and perhaps the new owners will be gentle....

2009-06-29 08:47:54

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