On November 28, 2007, Morris Publishing Group, LLC ("Morris Publishing"), as borrower, entered into an Amendment No. 2 and Waiver with JPMorgan Chase Bank, N.A. as Administrative Agent under the Credit Agreement dated as of December 14, 2005 (the "Credit Agreement") between Morris Publishing, Morris Communications Company, LLC ("Morris Communications"), the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Additional parties to the Amendment include the subsidiary guarantors of Morris Publishing Group and Morris Communications Holding Company, LLC, the parent of Morris Communications. The lenders party to the Credit Agreement are JPMorgan Chase Bank, N.A., The Bank of New York, SunTrust Bank, Wachovia Bank, N.A., Bank of America, N.A., General Electric Capital Corporation, Allied Irish Banks, P.L.C., AIB Debt Management, Limited, RBS Citizens, N.A., Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association,Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corporation, and Mizuho Corporate Bank, Ltd. The Credit Agreement provides for $350 million of senior secured term and revolving credit facilities.
The Credit Agreement contains a negative covenant prohibiting Morris Communications or any of its subsidiaries (including Morris Publishing) from selling or otherwise disposing of all or a substantial part of its business or property. Amendment No. 2 and Waiver waives compliance by Morris Communications with this covenant to permit Morris Publishing to sell fourteen daily newspapers, three nondaily newspapers, a commercial printing operation and other related publications to GateHouse Media, Inc.("GateHouse"), under the terms set forth in their definitive asset purchase agreement entered into on October 23, 2007. Morris Publishing is required to utilize all of the after-tax net cash proceeds from the disposition to promptly prepay or reduce the commitments in the manner set forth in the Credit Agreement.
The Credit Agreement and Amendment No. 1 to the Credit Agreement also contain financial covenants requiring Morris Publishing to meet certain financial tests on an on-going basis, including minimum interest coverage ratio, minimum fixed charge coverage ratio, and maximum cash flow ratios, based upon consolidated financial results of Morris Communications and all of its subsidiaries (including Morris Publishing). Amendment No. 2 amends the fixed charge coverage ratio as defined in the Credit Agreement to exclude the income taxes payable on the gain from the sale of assets to GateHouse from the calculation of the ratio.
A copy of Amendment No. 2 and Waiver is furnished as Exhibit 99.1 and is incorporated herein by reference.
