Gannett CEO Craig Dubow issued a statement that the company’s “underlying fundamentals remain strong” after Standard & Poor’s Ratings Service placed Gannett’s credit ratings on its Credit Watch list with “negative implications.” S&P cited declining newspaper advertising revenues as the reason for reviewing the credit ratings of Gannett for possible downgrade.
Gannett’s stock price has dropped from nearly $46 a year ago to below $17 lately as the biggest company of all in the hard-hit newspaper sector. Its TV station group has fared better, but is less significant to the company’s bottom line.
S&P currently ranks Gannett BBB+ for its long-term corporate credit rating and A-2 for its short-term credit rating.
“Our underlying fundamentals remain strong and we continue to be a solid investment grade company,” said the statement from Dubow, as he quickly moved to respond to the S&P action.
The statement said Gannett has continued to fund itself in the commercial paper market despite current market disruptions over the past few weeks. “As a prudent liquidity measure in light of the ongoing credit market dislocations, Gannett partially drew down on its committed revolving credit facilities sufficient funds to cover all of its commercial paper obligations outstanding. This action was taken prior to — and was completely unrelated to — Standard & Poor’s actions today,” the company stated.
“Irrespective of any actions Standard & Poor’s may take in the future, Gannett continues to generate substantial cash flow and also has significant untapped availability under its $3.9 billion of committed revolving credit facilities, far in excess of our total commercial paper obligations,” Gannett told Wall Street.