UPDATE 2-Orange County Register owner files for bankruptcy

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By Phil Wahba and Tom Hals

NEW YORK/WILMINGTON, Del., Sept 1 (Reuters) - The publisher of the Orange County Register and 29 other dailies filed for bankruptcy on Tuesday, the latest newspaper company to seek court protection due to the recession and online competition.

Freedom Communications Holdings Inc, which owns a total 90 newspapers and eight television stations, said it reached an agreement with the lenders of the majority of its roughly $1 billion debt to restructure the company.

Under the plan, lenders that currently hold $770.6 million of the company's debt will end up with 98 percent of the equity of the restructured company, according to a company spokeswoman. The debt will be cut to $325 million as a result.

JPMorgan Chase & Co (JPM.N) is acting as the administrative agent for those lenders, the spokeswoman said.

Freedom, which employs 5,076 people, must file its reorganization plan within 45 days under the terms of its restructuring plan, according to an affidavit.

The company is funding the bankruptcy with its cash.

Like its competitors, the company said in court documents that it has been fighting to offset the loss of advertising revenue as job listings and readers migrated to the Internet.

As the recession ate away at its display advertising, the company tried to cut costs by consolidating printing and laying off staff, but still defaulted on $770.6 million of debt, according to court documents.

"Reaching this agreement with our lenders provides us with an orderly process to re-align our balance sheet with the realities of today's media environment," Freedom chief executive, Burl Osborne, said in a statement.

The bankruptcy likely ends the ownership of the Orange County Register by the family of R.C. Hoiles, who purchased the paper in 1935 and is known for his libertarian philosophy.

The family continues to hold 52 percent of the company. The rest is owned by two private equity firms, Blackstone Group LP (BX.N) and Providence Equity Partners, who through a series of transactions bought their stakes sold by members of the Hoiles family in 2004.

Under the proposed restructuring, the current owners will end up with up to 2 percent of the restructured company.

Freedom is the latest newspaper publisher to file for bankruptcy protection following a sharp slump in advertising.

U.S. media group Tribune Co (TRBCQ.PK), publisher of the Chicago Tribune and the Los Angeles Times, filed for Chapter 11 in December, while Philadelphia Newspapers, which publishes the Philadelphia Inquirer and the Philadelphia Daily News, filed in February.

Freedom listed assets of $757 million and liabilities of $1.077 billion as of July 31, 2009, according to court documents filed with federal bankruptcy court in Delaware.

The case is In Re: Freedom Communications Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 09-13046 (Reporting by Phil Wahba, Tom Hals and Chelsea Emery in New York, and Santosh Nadgir in Bangalore; additional reporting by Megan Davies in New York; editing by Andre Grenon)