(Source: John Reid Blackwell Richmond Times-Dispatch, Va. (MCT) — Richmond-based Media General Inc. said Tuesday that it has reached an agreement with its lenders to extend by two years a debt repayment due next year, giving the company more breathing room as its looks to improve financial results.
The parent company of the Richmond Times-Dispatch said the amended credit agreement would extend the maturity date of $363 million in bank debt from March 2013 to March 2015, in return for a partial repayment of the debt.
Under the agreement, the company will need to raise at least $225 million by May 25 by issuing new notes. Of that, a minimum of $190 million would be used to pay down the outstanding term loan, with some money also being put into a reserve fund for operating expenses.
As part of the amended credit agreement, the company’s revolver will be reduced from $70 million to $45 million with no amount outstanding.
“It looks to me like the company, which has been under some financial stress, has gotten some breathing room,” said Steve Marascia, a research analyst for Capitol Securities Management in Henrico County.
“The biggest thing was pushing out that $363 million that was due in March 2013 to March 2015,” he said. “It gives the company time to orchestrate a potential turnaround.”
Media General said the agreement includes covenant modifications that will “provide the company more flexibility to operate in the current uncertain economic environment.”
“We are pleased with the overall parameters of our new financing structure,” Marshall N. Morton, the company’s president and chief executive officer, said in a statement. “While interest costs will be higher in 2012, our amended credit agreement will provide Media General with more flexibility to operate, as well as expanded opportunities to reduce total debt through asset sales and pursuit of further refinancing options.”
Media General had $658 million of long-term debt at the end of 2011.
The company said in February that it was exploring a possible sale of newspaper operations to help pay off its debt. Media General has said in the past that it would consider asset sales at valuations that reflect the strength of its properties to help pay off debt.
The company’s properties include 23 daily newspapers and 18 television stations, mostly in the Southeast, along with associated websites.
Like other media companies, Media General has been seeking to increase its revenue through digital media products as print media advertising has declined.
Morton said the company will continue to focus on that strategy through expanding paid-content initiatives, seeking beneficial partnerships with other fast-growing online businesses, developing new technology and broadening its product offerings.
“The biggest challenge not just for (Media General) but for a lot of these newspaper-oriented companies is how do they compete in a new digital media age?” Marascia said. “That is where the importance of a successful transition going forward comes into play for all of these companies.”
Media General had delayed the filing of its 2011 annual report with the Securities and Exchange Commission because of the negotiations with its lender. The company said Tuesday that it plans to file the report Thursday.
The company’s shares rose 4.5 percent, or 23 cents, to $5.40 Tuesday.
©2012 the Richmond Times-Dispatch (Richmond, Va.)
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