Publisher of Orange County Register may have violated loan terms

Freedom said it drew down the balance of its revolving credit "several weeks ago" because of uncertainty in the financial markets.

Freedom, owner of more than 30 daily newspapers, is cutting costs and examining other strategic options. The company's East Valley Tribune in Mesa, Ariz., said Monday that it planned to eliminate 142 jobs, or 40% of its staff, as it cuts back to four print editions a week. The newspaper will also be distributed for free.

Moody's Investors Service lowered the closely held company's credit rating to B3, six levels below investment grade, from B2 on Sept. 5 and said it might reduce the rating further, citing the increased chance of default if lenders didn't ease loan terms.

Maya Pogoda, an outside spokeswoman for Freedom with Sitrick & Co. in Los Angeles, declined to say how much the company drew on its credit line or give details of the covenant violations.

As of June 30, Freedom had about $5 million in cash and about $260 million untapped under its $300-million revolving credit facility, Moody's said. Freedom's debt covenants probably limited its access to the credit facility to about $7 million, Moody's said. Sales dropped about 13% in the second quarter, the ratings agency added.

Blackstone Group and Providence Equity Partners Inc. own about 45% of the company, according to Standard & Poor's.