Gannett Gains on Plans to Refinance Debt to Lower Interest Costs

© Reuters.

By Dhirendra Tripathi – Gannett stock (NYSE:) rose 4% on Monday after the company announced another round of refinancing of its existing debt to bring down its interest costs.

The subscription-led digital media company will issue up to $550 million in senior secured notes, targeting a rate of 500 basis points over LIBOR (which is currently around 0.13%). That compares with a coupon of 7.75% for the bonds it issued in a January refinancing.

Gannett Holdings, a fully-owned subsidiary of the company, would be the borrower and lenders are likely to be funds managed by affiliates of Apollo Capital Management.

The company behind USA Today expects to end the quarter with its 5-year term loan principal under $900 million and to have approximately $130 million of cash and cash equivalents. The loan stands at $925.7 million as of now.

The company now expects its adjusted earnings margin in the third quarter to be approximately 12% to 13% compared to around 13.7% in the first half of 2021. The company said inflation in newsprint and delivery as well as the resurgence of the pandemic are hurting the margins. It said they have affected circulation revenue and the events business, including the ability to host in-person endurance races and local community events.

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