Moody's drops Freedom Com

Moody's Investors Service said it downgraded Freedom Communications Inc.'s probability of default rating to Caa2 from Caa1, corporate family rating to Caa1 from B3 and the senior secured credit facility to Caa1 from B3.

The downgrade follows the company's announcement that it may be in violation of its credit facility maintenance financial covenants as of Sept. 30 and that it has fully drawn on its $300 million revolving credit facility, the agency said.

All ratings remain under review for possible downgrade.

Affected ratings include the company's $300 million senior secured revolving credit facility due 2011 to Caa1, LGD3, 33% from B3, LGD3, 31%; $319 million senior secured term loan A due 2011 to Caa1, LGD3, 33% from B3, LGD3, 31%; and $300 million senior secured term loan A-1 due 2012 to Caa1, LGD3, 33% from B3, LGD3, 31%.

The downgrades reflect heightened risk of a near term default due to the potential for a covenant violation, the revolver drawdown, and tight bank lending conditions, and Moody's expectation that economic challenges will further depress advertising spending into 2009.

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