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FP Newspapers Inc. Announces Completion of Long Term Debt Renewal Agreement(June 07, 2012)
WINNIPEG, MANITOBA -- (Marketwire) -- 06/07/12 -- FP Newspapers Inc. (TSX:FP) is pleased to announce that FP Canadian Newspapers Limited Partnership ("FPLP") has finalized a long term debt renewal agreement with HSBC Bank Canada. The new agreement, which runs through January 31, 2016, continues the lending relationship which started in December 2009.
The key terms of the renewal agreement include the release of $5.0 million of restricted cash which FPLP had pledged under the original agreement, and interest rate spreads over prevailing bankers acceptance rates based on quarterly trailing twelve month leverage ratios ranging from 1.75% to 2.75%. The previous agreement, which was to have run until January 31, 2013, included interest rate spreads over prevailing bankers acceptance rates ranging from 3.0% to 3.75%. The renewal agreement includes annual principal repayments of $1.0 million compared to $5.0 million under the original loan agreement. Total principal under the renewal agreement is $48.3 million and at the current leverage ratio, annual interest savings amounts to approximately $0.6 million.
"We are very pleased to have completed this renewal on the above terms and appreciate the support we have received from HSBC Bank Canada," said Ron Stern, Chief Executive Officer of FPLP. "While the renewal agreement has a reduced level of required principal repayments, we believe continued de-leveraging is prudent over the long term, and the agreement does allow us to make additional principal repayments with no penalty. Voluntary additional principal repayments prior to the expiry of the renewal agreement will be determined based on future business conditions. As newspaper print advertising revenue levels are continuing to decline, efforts to reduce expenses in all areas while trying to grow new revenue sources continue to be the major focus of our business units."
FP Newspapers Inc. owns securities entitling it to 49% of the distributable cash of FP Canadian Newspapers Limited Partnership. FP Canadian Newspapers Limited Partnership owns the Winnipeg Free Press, the Brandon Sun, and their related businesses, as well as the Canstar Community News division, the publisher of eight community and special interest newspapers in the Winnipeg region, and the Carillon in Steinbach with its related commercial printing operations. The Winnipeg Free Press publishes six days a week for delivery to subscribers and single copy sales, serving Winnipeg and Manitoba with an average Monday through Saturday circulation of approximately 122,700 copies. On Sundays the Winnipeg Free Press publishes a newspaper sold through single-copy retail outlets and vending boxes. The Brandon Sun publishes six days a week, serving the region with an average circulation of approximately 13,200 copies. Canstar Community News publishes weekly with an average circulation of approximately 200,000 copies. The businesses employ approximately 570 people in Winnipeg, Brandon and Steinbach. Further information can be found at www.fpnewspapers.com, and in the disclosure documents filed by FP Newspapers Inc. with the securities regulatory authorities, available at www.sedar.com.
FP Newspapers Inc.
(204) 632-0281 (FAX)
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