The McClatchy Co. said today it would suspend paying shareholder dividends after April 1.
The Bee's publisher said it would make its last quarter dividend payment April 1 and then suspend the payouts "for the foreseeable future in order to preserve cash for debt repayment."
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 ratio compares debts to profitability, and as McClatchy's profits have fallen, the ratio has risen. It's possible the company could exceed the threshold Feb. 5, when fourth-quarter earnings are reported.
"We are not waiting to see that," said Treasurer Elaine Lintecum, explaining the decision to halt future dividend payments. "We think ... it's important to focus on future cash flow and debt repayment."
McClatchy stock closed Tuesday at 85 cents a share, up 2 cents, on the New York Stock Exchange.
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