Moody's may downgrade Tegna

Moody's Investors Service said it placed Tegna Inc.'s Ba2 corporate family rating on review for downgrade, along with its Ba1-PD probability of default rating and Ba2 (LGD 4) ratings on the company's senior unsecured notes, including the 2027 unsecured notes issued by Belo Corp.

The downgrade review follows news that the company entered into a definitive agreement with the Dispatch Broadcast Group to acquire two television and two radio stations for total cash consideration of $535 million.

Tegna plans to draw on its $1.5 billion revolving credit facility to help fund the $535 million acquisition price, as well as the $740 million acquisition of stations being divested by Nexstar Broadcasting, Inc. as announced in March, Moody's explained.

The agency said it expects Tegna to raise new financing given its upcoming $320 million October 2019 maturity and $725 million 2020 maturities.

The additional debt will lead to the company's adjusted leverage increasing to about 5.3x at year-end 2019, Moody's said.

The review will focus on understanding the company's financial policy going forward and assess the levers the company has at its disposal to ensure leverage returns to levels more commensurate with a Ba2 rating, the agency said.

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