The McClatchy Co., the embattled parent of The State, The Myrtle Beach Sun News, The Charlotte Observer, The Raleigh News & Observer, The Rock Hill Herald, The Hilton Head Island Packet and The Beaufort Gazette, said yesterday it would suspend shareholder dividends after April 1.
The newspaper company said it’s making the move “for the foreseeable future in order to preserve cash for debt repayment,” according to The Sacramento Bee.
McClatchy cut the dividend in half last fall, to 9 cents a share. Then, pressed by declining revenue, it renegotiated its bank loans. Under the new agreement, the Sacramento-based chain was forbidden from paying dividends if its “leverage ratio” exceeded a certain threshold, the Bee reported.
The third-largest U.S. newspaper publisher is struggling to pay off $2 billion in debt related to its purchase of defunct newspaper chain Knight Ridder Inc., according to Reuters.
In recent months, McClatchy and other newspaper companies have explored selling real estate or other assets in a bid to pay off money they borrowed as advertising revenue, long their primary source of income, declines, Reuters reported.
McClatchy is trading at less than a dollar a share.