What happened

Shares of Gannett (NYSE:GCI) have skyrocketed today, up by 26% as of 1:15 p.m. EST, after the company restructured  $500 million of debt. Management also offered some optimistic commentary around the fourth quarter.

So what

Gannett has refinanced $500 million of debt that was bearing an 11.5% interest rate and maturing in 2024, swapping out the debt with 6% convertible notes that are due in 2027. That will give the media company, which publishes USA Today as well as many local newspapers, greater financial flexibility while reducing interest expense. The outstanding balance of Gannett's term loan has now been reduced to approximately $1.12 billion.

A generic local newspaper with a pen pointing to the headline, Local News.

Image source: Getty Images.

CEO Michael Reed noted that the move will yield annual interest savings of roughly $28 million. The chief executive is optimistic that Gannett will be able to refinance the remainder of the term loan, which was initially put in place a year ago. The company plans to repay another $100 million within a matter of months, bringing the outstanding balance closer to $1 billion.

Now what

Reed is planning to refinance that remaining $1 billion "on attractive terms" within the first half of next year. He also offered some positive commentary for the final quarter of 2020: "As we improve the Company's capital structure, we are also seeing continued improvement in our revenue trends, which we expect will drive strong fourth quarter results," the CEO added.

The COVID-19 pandemic had impacted Gannett earlier in the year as advertisers pulled back on spending, but the company's results recovered  in the third quarter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.