Moody's cuts Freedom Communications

Moody's Investors Service said it downgraded Freedom Communications, Inc.'s corporate family rating to B2 from Ba3 and probability-of-default rating to B3 from B1.

The agency lowered the 300 million senior secured revolving credit facility due 2011 to B2 (LGD3, 32%) from Ba3 (LGD3, 31%), $319 million senior secured term loan A due 2011 to B2 (LGD3, 32%) from Ba3 (LGD3, 31%) and $300 million senior secured term loan A-1 due 2012 to B2 (LGD3, 32%) from Ba3 (LGD3, 31%).

The downgrade reflects concerns about the company's liquidity to accommodate near-term scheduled amortization requirements and remain in compliance under financial maintenance covenants following continued weakness in operating performance, according to Moody's.

The outlook is negative. This concludes the review for downgrade, which began in April.

The B2 rating reflects high leverage, the cyclical and secular pressure faced by its newspaper publishing business, vulnerability to subprime markets and dependence on Orange County, Calif., for more than a third of its revenue base, Moody's said.

Ratings are supported by the strong market position of many of its media properties, the substantial contribution of non-publishing operations to its revenue base and the perceived value of its media properties, the agency noted.

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