Long-Term Debt

6 Months Ended

Jun. 30, 2011

7. LONG-TERM DEBT

We have a Revolving Credit Agreement (“Agreement”), which expires June 30, 2013. The maximum amount of availability under the facility is $100 million. Borrowings under the Agreement are limited to a borrowing base, as follows:

a)		100% of cash maintained in a blocked account (up to $20 million),

b)		85% of eligible accounts receivable,

c)		40% of eligible newsprint inventory, and

d)		50% of the fair market value of eligible real property (limited to $25 million).

At June 30, 2011, no amounts were outstanding under the credit agreement and we had borrowing capacity of $90 million.

Under the terms of the Agreement we granted the lenders mortgages on certain of our real property, pledges of our equity interests in our subsidiaries and security interests in substantially all other personal property, including cash, accounts receivables, inventories and equipment. If at any time, the amount of excess availability (defined as the amount by which the borrowing base exceeds the aggregate borrowings and letters of credit under the Agreement) is equal to or less than $30 million, we must then maintain a fixed charge coverage ratio (as defined therein) of at least 1.1 to 1.0.

The Agreement allows us to make acquisitions or return capital of up to $150 million, respectively, over the remaining term of the Credit Facility, up to a maximum aggregate of $200 million.

Borrowings under the Agreement bear interest at variable interest rates based on either LIBOR or a base rate, in either case plus an applicable margin that varies depending upon average excess availability. The margin for LIBOR based loans ranges from 2.75% to 3.25% per annum. The margin for base rate loans ranges from 1.75% to 2.25% per annum. The weighted-average interest rate on borrowings under the credit facility was 3.0% at June 30, 2011 and December 31, 2010. Commitment fees of 0.50% per annum of the total unused commitment are payable under the credit facility.

As of June 30, 2011, and December 31, 2010, we had outstanding letters of credit totaling $1.1 million and $10.4 million, respectively.

In October 2008, we entered into a 2-year $30 million notional interest rate swap which expired in October 2010. Under this agreement we received payments based on the 3-month LIBOR and made payments based on a fixed rate of 3.2%. This swap was not designated as a hedge in accordance with generally accepted accounting principles and changes in fair value were recorded in miscellaneous-net with a corresponding adjustment to other long-term liabilities. For the six-months ended June 30, 2010, a $0.4 million gain was recorded in miscellaneous, net.