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Moody's says MediaNews at risk of default

Moody’s has lowered the bond rating of MediaNews Group three levels from B3 to Caa3 on a 21-notch scale, a rating that suggests a “substantial risk” of default, E&P reports today.

MNG’s leverage ratio is now 8 times debt to earnings before interest, taxes, depreciation and amortization. Tribune Co. went into Chapter 11 bankruptcy on Monday when it began to approach a ratio hit 9 times EBITDA. By comparison, Gannett’s ratio is 2 times EBITDA.

MediaNews’ revenue fell 16 percent in the quarter ended Sept. 30, according to Moody’s. The rating agency said continued ad sales declines increase the likelihood that MediaNews won’t be able to meet terms of its debt agreements.

MediaNews owns 11 daily newspapers in the Bay Area including the Mercury News, Contra Costa Times, Oakland Tribune, San Mateo County Times and Marin Independent Journal.

Moody’s said the outlook for MediaNews remains negative:

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