Irvine-based Freedom Communications Inc., parent company of the Orange County Register, said Wednesday a group of lenders extended until Dec. 31 a deadline for the company to meet credit terms it technically defaulted on in September.
Freedom went into technical default on terms agreed to with lenders last fall after its declining 12-month profits put its debt at more than five times profits, according to Chief Executive Scott Flanders.
Flanders had been working with a group of 26 lenders since September.
As part of the waiver, the company said it prepaid some principal payments due this year as well as an amendment fee.
Freedom is expected to have and generate sufficient cash to meet its financial requirements, according to a posting on the Register’s Web site.
The company declined to detail the amount of the loan or the payments.
“This is positive news for the company because it gives us the time needed to reach consensus on a more comprehensive restructuring of our debt,” Flanders said on the Register’s site.
“In addition to the significant changes we have already undertaken to make our business more competitive during these challenging times, deleveraging our balance sheet to better reflect current revenue streams will be another important step in our company’s transformation.” he said.
Along with the Register, Freedom owns dailies, weekly community papers and television stations across the country. It has estimated yearly revenue of $600 million to $700 million.
The newspaper industry has seen a rash of failures and bankruptcies as acquisition-related debt and the recession prove to be a killer combination.
Among those to have filed for bankruptcy is Chicago’s Tribune Co., owner of the Los Angeles Times.
There had been talk in the past that Freedom had been considering bankruptcy among other options.
“We have other alternatives, which doesn’t mean it’s impossible. It is possible, but unlikely.” Flanders told the Business Journal in March.
Freedom isn’t as indebted as some other newspaper companies, according to Flanders.
Debt rating company Standard & Poor’s lowered its rating on Freedom’s secured credit lines from “CCC+” to “CCC-” last week, according to an Associated Press report.
The rating agency said at the time that the downgrade was due in part to the company’s failure to win a waiver from its lenders.
