UPDATE 1-AH Belo alters debt terms, freezes salaries
NEW YORK, Oct 24 (Reuters) - Dallas Morning News publisher AH Belo Corp (AHC.N) on Friday became the latest U.S. newspaper owner to say it is changing the terms of its bank debt to run its business more flexibly during the world financial crisis.
AH Belo, which also publishes The Providence Journal in Rhode Island, also said it is freezing employee salaries, effective Nov. 1.
"Many other industries have frozen or reduced wages in response to our country's economic turmoil," Chief Executive Robert Decherd wrote in a letter to employees at the Dallas-based company.
Several other publishers, including McClatchy Co (MNI.N), have amended their debt terms as they try to avoid edging closer to violating their lender agreements, a move that can bring companies closer to default.
They are doing this as they cope with often high debt levels and eroding advertising revenue.
AH Belo's amended credit agreement halves the total commitment amount to $50 million.
"We are pleased with the added financial flexibility provided in this amendment -- although at a higher cost -- because it provides room for us to make the best strategic and operational decisions," Decherd wrote in a press release.
It restricts the payment of cash dividends and gives the lenders a security interest in the company's accounts receivable and inventory. It does not apply to the dividend declared on Sept. 24, which will be paid in November, AH Belo said in a statement.
The company also plans to save $30 million on an annualized basis by cutting its workforce by 13 percent and employment expense by $30 million in 2008, Decherd wrote in a separate letter to shareholders. (Reporting by Robert MacMillan; editing by John Wallace)
