The McClatchy Co., owner of the News & Observer, is no longer on a death watch, having been upgraded to the status of “profoundly troubled” from “circling the drain” (my categories, by the way, not official ones). The result of that slight improvement in economic health is that the company’s financial statements don’t get the same scrutiny as they did just a year ago. At least by me.

That’s a long way of saying that I have only now gotten around to reading the particulars of McClatchy’s $875 million bond deal, which was announced earlier this month. But before I share the details, a quick summary of recent history is in order: Last year, McClatchy sought to reduce its debt burden — then at $2 billion — by seeking a bond swap, in which holders of $1.15 billion in bonds would trade them in for new ones with a higher interest rate. Sound like a good deal? Well, it wasn’t, for reasons I explained in this column for Business North Carolina magazine. (Basically, McClatchy offered as little as 18 cents on the dollar for the outstanding notes, and told bondholders that if they didn’t accept they’d be moved to the back of the line for reimbursement if the company went into bankruptcy — as seemed possible at the time.) Despite that strong-arm tactic, the overwhelming majority of bondholders declined the offer.

Then a funny thing happened. McClatchy’s financial fortunes improved, and bankruptcy no longer seemed likely. Problem was, a big bond payment was coming due in 2011 and McClatchy still didn’t have the cash to cover it. Even worse, it couldn’t try the settle-for-pennies threat again because if nobody caved in back when bankruptcy seemed possible, they sure weren’t going to cave in now. So McClatchy came up with a new scheme plan a few weeks ago: It would issue $875 million in new bonds, and use the money to not only pay off the debt due in 2011, but also pay back $567 million owed to the bank.

The new bonds come due in 2017, and they do nothing to relieve McClatchy’s debt obligation, which is still stuck at $1.9 billion. What that means, of course, is that the company simply kicked the problem down the road. But there was one significant fact buried deep in McClatchy’s announcement of the bond deal:

The notes are senior obligations of McClatchy that are guaranteed by each of McClatchy’s subsidiaries that guarantee indebtedness under McClatchy’s credit agreement.  The notes and guarantees are secured by a first-priority lien on certain of McClatchy’s and the subsidiary guarantors’ assets, and will rank pari passu with liens granted under McClatchy’s credit agreement.

Confused? Hell, who but a financial geek wouldn’t be? But what that paragraph says is that the new bonds, unlike the previous ones, are backed by McClatchy’s assets. Bondholders will be on equal footing with the banks. (That’s what “pari passu” means.) And one of those assets, of course, is the News & Observer.

Here’s my advice: Pray for a default, because that’s about the only way anybody is ever going to pry the N&O from McClatchy’s life-sucking grip.