UPDATE 1-Lee Enterprises amends credit terms; suspends dividend

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Oct 30 (Reuters) - Newspaper publisher Lee Enterprises Inc (LEE.N) said it amended its credit terms, hurt by the credit crisis and economic downturn, and suspended its dividend to facilitate the payment of bank debt.

The slowdown in the U.S. economy has deepened the wounds of newspaper publishers, particularly the classified employment advertising segment.

Lee said the key changes to the bank credit agreement includes a reduction in revolving credit facility to $375 million from $450 million.

The company said it also eliminated an unused incremental borrowing facility of $500 million.

"While we expect to be in compliance with our leverage ratio requirement at the end of our 2008 fiscal year in September, the credit agreement included a reduction in the ratio beginning in the December 2008 quarter," Chief Financial Officer Carl Schmidt said in a statement.

The company said it has repaid $463 million of debt and reduced net debt by an even larger $486 million since June 2005.

Shares of Lee closed at $3.29 Thursday on the New York Stock Exchange. (Reporting by Bijoy Koyitty in Bangalore; Editing by Jarshad Kakkrakandy)