Released: 09/26/2008

SACRAMENTO, Calif., Sept. 26 -- The McClatchy Company (NYSE: MNI) announced that it has entered into an amendment to its $1.175 billion bank credit facility. The amendment provides greater flexibility for the life of the credit facility in the allowable leverage and interest coverage ratios, the two primary financial covenants contained in the agreement, while providing banks in the credit syndicate with new security in certain collateral and higher pricing.

Pat Talamantes, McClatchy's chief financial officer, said, "As we noted in our second quarter earnings conference call, our advertising revenues continue to suffer from the economic downturn that is being felt nationwide. In particular, a majority of our advertising decline has come from California and Florida, two regions that benefited strongly from the real estate boom, and are likewise being hurt in the aftermath of the real estate collapse. While there are structural changes at work in the newspaper industry, we believe cyclical factors represent a majority of this advertising downturn.

"We have focused on restructuring our operations and cutting costs to mitigate the impact of the decline in revenues on our cash flow. McClatchy is committed to remaining a healthy, profitable company positioned to meet current challenges. We are also working to take full advantage of opportunities for growth as a digital company as we restructure to support our mission of delivering high quality news and information in whatever medium our readers want to receive it. We are quickly becoming a hybrid print and online media company serving some of the best markets in the country."

"Notwithstanding the outstanding efforts made by our papers to weather this downturn, we believe as we look to 2009 that the impact of the current environment on our cash flows necessitated taking the initiative to discuss the effect on our leverage with our banks and structuring an amendment," said Mr. Talamantes. "The resulting amendment is a positive development for the company in that it allows us greater flexibility to work through these difficult economic times."

    Among other things, the amended Credit Agreement:
    -- Increases the consolidated total leverage ratio covenant (as defined)
       to a maximum of 6.25 times cash flow (as defined) through the quarter
       ending December 2008; stepping up to 7.00 times from the quarter ending
       in March 2009 to the quarter ending in September 2010; and declining to
       6.25 times thereafter. Upon the sale by the company of certain real
       estate in Miami, the applicable leverage ratio covenant will be reduced
       by 0.25 times.
    -- Decreases the consolidated interest coverage ratio covenant (as
       defined) to a minimum of 2.25 times cash flow through the quarter
       ending December 2008; and further declining to 2.00 times thereafter.
    -- Implements an immediate reduction in the revolving credit commitment
       now totaling $625 million to $600 million (to a total facility of
       $1.150 billion); a further reduction of $125 million upon sale of the
       Miami land; and a reduction of $25 million on December 31, 2009.  The
       company's availability under the revolving credit commitment is
       expected to be approximately $140 million after the new amendment is
       implemented.  The final maturity of the revolving credit commitment and
       the term loan remains June 27, 2011.
    -- Adds all direct and indirect material subsidiaries as guarantors
        (currently limited to 80% of subsidiaries (as defined)).
    -- Grants a security interest in intangible assets, inventory, receivables
       and certain other assets.
    -- Increases pricing on all outstanding loans to interest at the London
       Interbank Offered Rate (LIBOR) plus a spread ranging from 200 basis
       points to 425 basis points, based upon the total leverage ratio.
       Interest will increase by 75 basis points to LIBOR plus 275 basis
       points when leverage is between 4.5 and 5.0 times.  Additional
       increases will occur to the extent that the company's leverage rises
       further.  Upon completion of the Miami real estate sale, the applicable
       interest rate tiers will decrease by 25 basis points.
    -- Adds various requirements for mandatory prepayments of bank debt from
       certain sources of cash.
    -- Adds limitations on cash dividends allowed to be paid as follows:
       -- Permitted up to a total of $16 million of dividends paid during the
          two fiscal quarters ending in March and June 2009.
       -- After the fiscal quarter ending in June 2009, dividends are not
          permitted if leverage is greater than 5.0 times cash flow.
       -- Dividends are permitted up to $32 million annually when leverage is
          less than or equal to 5.0 times cash flow.
       -- Dividends are permitted up to $48 million annually when leverage is
          less than 4.0 times cash flow.
    -- Adds and amends other covenants including limitations on additional
       debt, investments, acquisitions, dispositions and the ability to retire
       those bonds that come due in 2011 or later prior to maturity, amongst
       other changes.

Mr. Talamantes said, "The willingness of our bank group to agree to this amendment demonstrates the confidence they have in the company, and we very much appreciate their support. We will return the favor by working to reduce our leverage and pay down debt. In the first half of 2008, our cash flow, coupled with asset sales and the income tax refund related to our sale of the (Minneapolis) Star Tribune in 2007, allowed us to repay more than $370 million of debt. We expect to make further progress in deleveraging our balance sheet and expect total debt to be in the $2 billion range by the end of 2008, far better than the projections we provided the bank group at the time of the Knight Ridder acquisition in 2006."

About McClatchy

The McClatchy Company is the third largest newspaper company in the United States, with 30 daily newspapers, approximately 50 non-dailies, and direct marketing and direct mail operations. McClatchy also operates leading local websites in each of its markets which extend its audience reach. The websites offer users comprehensive news and information, advertising, e-commerce and other services. Together with its newspapers and direct marketing products, these interactive operations make McClatchy the leading local media company in each of its premium high growth markets. McClatchy-owned newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, the Charlotte Observer, and The (Raleigh) News & Observer.

McClatchy also owns a portfolio of premium digital assets, including 14.4% of CareerBuilder, the nation's largest online job site, and 25.6% of Classified Ventures, a newspaper industry partnership that offers two of the nation's premier classified websites: the auto website, cars.com, and the rental site, apartments.com. McClatchy is listed on the New York Stock Exchange under the symbol MNI.

Additional Information:

Statements in this press release regarding future financial and operating results, including revenues, anticipated savings from cost reduction efforts, cash flows, debt levels, as well as future opportunities for the company and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," estimates and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the duration and depth of an economic downturn in markets where McClatchy operates its newspapers may reduce its income and cash flow greater than expected; any reduction in income and cash flow may negatively impact McClatchy's ability to reduce debt, McClatchy may not consummate contemplated transactions which may enable debt reduction on anticipated terms or at all; McClatchy may not achieve its expense reduction targets or may do harm to its operations in attempting to achieve such targets; McClatchy's operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; McClatchy's expense and income levels could be adversely affected by changes in the cost of newsprint and McClatchy's operations could be negatively affected by any deterioration in its labor relations, as well as the other risks detailed from time to time in the Company's publicly filed documents, including the Company's Annual Report on Form 10-K for the year ended December 30, 2007, filed with the U.S. Securities and Exchange Commission. McClatchy disclaims any intention and assumes no obligation to update the forward-looking information contained in this release.

SOURCE The McClatchy Company

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