Morris Under The Gun To Sell Off Something, Anything

Fitz: Standard & Poor's Ratings Services on Friday downgraded Morris Publishing Group's
subordinated debt again, and warned that it may also lower its ratings for The Florida Times-Union parent's senior credit and overall corporate credit. No big deal, right? In this credit lockup, even the most credit-worthy newspaper company, like Gannett, is being punished for dipping into its revolver to have some cash on hand.

What's much more interesting about S&P's Friday action is the amendments to the Morris loan agreements that triggered the downgrading.

Check this out from the Securities and Exchange Commission disclosure Morris filed in regard to the loan amendment:

"Amendment No. 3 requires Morris Communications and its Restricted Subsidiaries (including Morris Publishing) to consummate a transaction (or at least sign a letter of intent to do so) that would generate sufficient funds to be able to prepay all loans under the Credit Agreement, or to purchase an assignment of all loans and commitments of the lenders at par, no later than the delivery date of Morris Communications' financial statements for the quarter ending March 31, 2009 (but not later than May 30,

Last year, Morris sold 14 dailies mostly in the Plains states to GateHouse Media, and the speculation at the time was that the sale was necessitated by its debt situation. This latest SEC filing removes all the speculation: It's garage sale time at its Augusta, Georgia headquarters.

More newspaper inventory on the market -- that can't be good for prices.