The E.W. Scripps Co., a media outfit with interests in print, broadcast and new media, is looking to enter its debut interest-rate swap as a public company and its first in more than a decade, said John Wolfzorn, treasurer in Cincinnati. He said the company has entered interest-rate swaps in the past, but none since its initial public offering in 1988. He was unable to provide more information about the company's previous use of swaps.
The interest comes on the heels of a 10-year, USD200 million bond Scripps sold late last month. Wolfzorn said he plans to leave it as a fixed-rate obligation, but that it is now looking to enter a swap to convert an outstanding 10-year bond because of the change to the interest-rate debt mix. In the swap, Scripps would seek to receive the 6.625% coupon on the USD100 million bond and pay roughly 195 basis points over six-month LIBOR. The swap will be five years to match the remaining maturity of the bond. "We are just starting the investigation and are talking to banks about swapping that to floating," he said, declining to name potential counterparties.
Once Scripps enters a swap on the outstanding deal and pays down another deal that is due to mature this autumn, Wolfzorn said it will have USD550 million in outstanding debt, evenly mixed between fixed and floating.
He said the company, which is the ninth-largest newspaper publisher in the U.S., is seeking to enter its first swap now because it had previously done most of its funding through the floating-rate commercial paper market. Now, however, it is taking on more fixed-rate debt after last month's transaction and wants to keep a healthy mix. "We just don't want to swap the new deal, because a lot can happen between now and then," he said, referring to potential rate movements during the 10-year span. He added that Scripps was able to raise USD200 million of 10-year money at 5.75%, a significantly lower coupon than on the 10-year bond of which it is now seeking to enter a swap. He stressed the company is not an active user of over-the-counter derivatives, although it has entered foreign exchange forward contracts as well as swaps to hedge its exposure to newsprint costs.
Moody's Investors Service rates Scripps A2 and Standard & Poor's rates it single A. Scripps publishes 21 daily newspapers in the U.S. and also owns the licensing rights to the Dilbert and Peanuts comic strips.
