The announcement from Media General that it was selling off most of its newspaper assets to Berkshire Hathaway in order to concentrate on its television-related assets earned a favorable review from at least one close observer.
Moody’s Investor Service upgraded its speculative-grade liquidity rating to SGL-3 from SGL-4 – essentially promoting it from a stable to a positive rating.
Moody’s explained, “The positive rating outlook reflects Moody’s view that Berkshire Hathaway, Inc.’s (Berkshire; Aa2 stable) agreement to provide Media General with $445 million of new financing ($400 million term loan and $45 million revolver) and acquire Media General’s newspaper assets (excluding Tampa) for $142 million in cash diminishes default risk and provides the company additional long-term flexibility to attempt to reduce its very high leverage. Media General plans to utilize the net proceeds from the proposed $400 million Berkshire loan to refinance all of its existing $363 million term loan due in March 2013. Media General’s Caa1 Corporate Family Rating (CFR), Caa1 Probability of Default Rating (PDR) and Caa1 senior secured notes due 2017 rating are not affected.”
