NEW YORK – S&P Global Ratings has downgraded The E.W. Scripps Co. to ‘CC’ from ‘B-‘ following the company’s announcement of a debt restructuring proposal aimed at extending maturities on its senior secured term loans. S&P also removed all ratings from CreditWatch negative, where they had been placed on January 8, 2025.
The downgrade follows Scripps’ plan to:
- Exchange its $543 million senior secured term loan B3 due 2028 for a new loan due in 2029, with potential rollovers into a new term loan B2.
- Exchange its $721 million senior secured term loan B2 due 2026 into a new loan due in 2028, with a portion of the debt being repaid using proceeds from an accounts receivable securitization.
- Extend a portion of its $585 million revolving credit facility from 2026 to 2027.
S&P views the proposed restructuring as a distressed exchange tantamount to default, as participating lenders are expected to receive less than originally promised without adequate compensation. The agency noted that, absent this transaction, Scripps faces a realistic possibility of a conventional default in the coming quarters due to ongoing financial pressures.
Implications for Credit Ratings
- Issuer credit rating lowered to ‘CC’ from ‘B-‘
- Senior secured term loan B3 downgraded to ‘CC’ from ‘B+’
- Negative outlook indicates an expected downgrade to ‘SD’ (Selective Default) once the transaction closes
Scripps’ Debt Challenges and Industry Headwinds
Despite restructuring efforts, Scripps’ leverage remains high at 6.9x, with limited prospects for deleveraging due to secular declines in linear television advertising revenue. Additionally, the company still faces $426 million in unsecured notes due 2027, with maturities extending through 2031.
S&P also cited the company’s growing preferred stock balance and limited free cash flow, which could restrict its ability to reduce debt meaningfully. While asset sales have been pursued to reduce its $2.6 billion debt burden, proceeds are not expected to be significant enough to materially impact its financial position.
Future Rating Actions
- If Scripps completes the restructuring as proposed, S&P will downgrade its issuer credit rating to ‘SD’ (Selective Default) and its issue-level rating on the senior secured term loan B3 to ‘D’.
- If the company does not complete the restructuring, its rating could be raised to the ‘CCC’ category, reflecting ongoing refinancing risks and financial uncertainty.
The outlook remains negative, as S&P continues to monitor Scripps’ ability to navigate its financial restructuring and manage upcoming debt obligations.
