January 26, 2009

The Gray Lady turns a deathly shade of pale

By Thomas Lifson
Arthur Ochs "Pinch" Sulzberger Jr. has driven the proudest institution in journalism to the doorstep of ruin, its corporate debt earning the humiliating label of "junk" from Moody's Investors Services. And it wasn't just a slide over the line, the company tumbled three steps below investment grade. Even worse is Moody's negative expectation, meaning further downgrades are on the horizon in the next 12-18 months. Moody's has withdrawn its rating for NYTCo commercial paper, its unsecured corporate borrowing. Nobody in his right mind is going to loan the company money that way anymore.The terms of the company's  $250 million loan from 2 companies controlled by Carlos Slim Helú, the Mexican billionaire the paper once scorned, force the Times to pay over 14% to borrow money. The added interest cost, especially the 11% that is paid in cash (the other 3% gets added to the debt balance, just like a credit card bill that can't be paid in full), is one factor in...(Read Full Article)