Macquarie Media Group (MMG) said its American Consolidated Media LLC (“ACM”) subsidiary has entered into a forbearance agreement with its lenders. Late last month MMG announced that ACM had breached certain covenants under its US$133.7m business level bank facility.

The company said under the agreement, whilst the forbearance does not constitute a waiver of ACM's covenant breaches, the lenders have agreed not to exercise their rights arising from these and certain anticipated covenant breaches until the earlier of 29 January 2010.

In return, ACM has agreed to pay its lenders a forbearance fee of 0.25% of the aggregate principal balance of the loans under the ACM Facility, and a permanent increase in the applicable interest rate of approximately 2.3% per annum.

MMG said ACM’s revolving credit facility commitment would be permanently reduced from US$10 million to US$3 million, with certain restrictions on drawing from the facility. ACM will also be subject to monthly financial reporting obligations.

The company added that discussions would continue between ACM and its lenders during the forbearance period in relation to the facility.

"The ACM Facility is secured only against ACM and ACM’s assets,” MMG said.

“The MMG parent level entities have not provided any guarantees nor security in favour of ACM or its lenders.”

As at 1124 AEDT, Macquarie Media shares were down 3c to $2.08.