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A new credit agreement changes the formula-based financial targets that Lee must meet with its lenders. It raises one threshold and lowers another to account for reduced cash flow.
As part of the agreement, Lee has suspended paying stock dividends, instead using that money for debt repayment.
The changes and new agreement with lenders are similar to those obtained over the past two months by other newspaper companies, including McClatchy, Belo Corp. and Morris Publishing Group. Gannett Co. also said last week it was nearing a new deal with lenders.
Mary Junck, Lee’s chairman and chief executive, said the suspension of dividends, while mandated under the new agreement, should produce annual savings of $34 million to further reduce debt.
“We remain confident that Lee will emerge strong when the economy improves, but current trends indicate a need for this additional flexibility in meeting our debt obligation,” Junck said.
