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Times outlook raised on offering

NEW YORK CITY (AP) — The New York Times Co. announced Monday that it intends to offer $200 million in senior notes due 2016, a move that prompted two ratings agencies to improve their outlooks on the media company.

The New York Times confirmed that the offering will be private and said that, among other things, it will use the proceeds of this sale to pay down debt and meet other financial obligations as part of its larger refinancing strategy.

Moody’s Investors Service expects some of the proceeds of the sale will be used to pay down a $250 billion loan from Mexican billionaire Carlos Slim, which amounts to a 17 percent stake in the company. Slim, the world’s richest person, financed the loan through two of his companies, Banco Inbursa and Inmobiliaria Carso.

The New York Times said on October 4th that it intends to pay back the loan, which carries a 14 percent interest rate, by 2012, three years ahead of schedule.

Since the company announced its intention to sell $200 million in notes, Moody’s and ratings agency Standard & Poor’s Ratings Services have both improved their outlooks on the company.

Moody’s said it expected the New York Times to generate between $130 and $150 million in free cash flow in 2011 and 2012, and that it would use this money to continue reducing its debt.

Moody’s also said that although the newspaper industry isn’t likely to resume growth in the short term, it nevertheless bumped the company’s outlook to “positive” from “stable” out of confidence that the company will exercise fiscal prudence and will go ahead with charging readers to see articles on its website.

S&P echoed Moody’s prediction that The New York Times will weather a decline in the newspaper business better than some of its competitors.

“The stable rating outlook reflects our expectation that The New York Times will be able to maintain credit measures at current levels, despite the secular decline in print advertising revenues,” said S& P analyst Hal F. Diamond in a statement.