S&P rates Freedom facilities BB

Standard & Poor's said it assigned its BB rating to Freedom Communications Inc.'s planned $1.1 billion senior secured credit facilities, consisting of a $100 million six-year revolving credit facility, a $250 million six-year senior secured tranche A term loan facility, and a $750 million eight-year tranche B term loan facility. At the same time, recovery ratings of 3 were assigned to these facilities.

S&P also assigned a BB corporate credit rating to the company.

The outlook is stable.

Proceeds from the new credit facilities, combined with new cash equity from The Blackstone Group and Providence Equity Partners, will be used primarily to repurchase Freedom common stock from existing shareholders and to refinance existing debt.

S&P said the ratings on Freedom reflect the company's significant pro forma debt levels relative to its EBITDA base, attributable to the planned recapitalization. In addition, there are revenue and cash flow concentrations with the Orange County Register unit, which also faces competitive pressures from Tribune Co.'s Los Angeles Times.

S&P said that given the new equity investors, the company's longer-term operating and financial strategies are expected to evolve. Like other media companies, Freedom continues to face some challenging operating conditions. There is uncertainty over the strength of the advertising recovery, as well as greater employee benefit costs and higher newsprint prices. However, the company's television operations should benefit this year from increased political advertising.

These factors are tempered by the geographic diversity of Freedom's operations, relative stability of the community newspaper units, and meaningful cash flow generation after capital expenditures and dividends.

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