MUMBAI (Thomson Financial) - Moody's Investors Service said it has
downgraded Journal Register Co.'s corporate family rating to 'Caa2' from 'B3'
after the media company said it is probable that it will be in violation of the
total leverage financial covenant calculation under its senior secured credit
agreement as of July 23 unless there is significant improvement in
second-quarter operating results or it is successful in obtaining an additional
amendment.
Moody's also downgraded the company's probability of default rating to
'Caa3' from 'Caa1'.
The outlook remains negative reflecting concern that Journal Register is
likely to default under the terms of its senior secured loan covenants during
2008 and that even if the company receives further covenant relief, it is not
likely to generate sufficient free cash flow to cover its scheduled 2009 debt
repayment obligations, Moody's said.
The 'Caa2' rating reflects Journal Register's heavy debt burden, high
financial leverage, cyclical pressure which continues to depress the company's
advertising revenues and the competition posed by print and electronic media in
virtually all of its markets, Moody's said.
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