<div id="subtitle">McClatchy shares drop after publisher accepts high interest rates to push back loan deadlines</div><div><p>McClatchy Co. shares tumbled Friday along with the broader market after the newspaper publisher agreed to pay steep interest rates to push back its deadline for repaying debt.</p><p>The stock fell 51 cents, or 10 percent, to $4.51 in afternoon trading. It has fallen as low as 35 cents in the past year as investors worried about its ability to pay off borrowings.</p><p>After the market closed Thursday, McClatchy priced $875 million in new bonds due in 2017. It is selling the notes at 98.824 percent of face value with an interest rate of 11.5 percent.</p><p>The company, which publishes The Miami Herald and 29 other dailies, is using the proceeds to buy back older debt. It was paying 7.125 percent interest on $166 million due in 2011 and 15.75 percent on $24 million due in 2014.</p><p>Overall, the refinancing is a positive for McClatchy despite the high cost of borrowing, said Shelly Lombard, an analyst with Gimme Credit. She said the company would have struggled to pay off the $166 million due next year. But she said the McClatchy's stock is likely to remain volatile because of the uncertain long-range outlook for newspapers, which continue to lose advertising dollars to competition on the Web.</p><p>"This stock is going to be a cha-cha," she said. "A step up and two steps back."</p><p>(This version CORRECTS number of newspapers McClatchy owns.)</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=68528674&bid=informcom" /></div><div id="copyright"><div>

Copyright 2010  <a href="http://www.ap.org">AP News</a></div></div>