Augusta, Georgia-based newspaper and city magazine publisher Morris Publishing Group said late Friday that it has agreed with the holders of more than 75 percent of its senior subordinated notes on a debt restructuring.

According to terms of the agreement, holders of Morris’ $278.5 million in outstanding notes would exchange those existing notes for $100 million in new, second lien secured notes. At the same time, Morris “affiliates” would “make capital contributions and repay indebtedness to Morris Publishing in order to cancel $110 million of its $138.75 million in existing senior secured indebtedness,” the company said.

It was not immediately clear who the affiliates are. Craig Mitchell, Morris’ senior vice president of finance, did not immediately return a request for comment.

Morris also said it reached agreement with holders of more than 80 percent of its senior notes to again extend two semi-annual interest payments of $9.7 million on its senior subordinated notes until October 16. The payments originally were due February 1 and August 1.

The company said the restructuring agreement is “subject to the final negotiation and execution of the definitive legal documentation and other closing conditions.” It was not immediately clear when those negotiations might take place.

According to Michael Alcamo, president of a New York City-based investment banking firm M.C. Alcamo & Co., the restructuring agreement is a positive move for Morris as well as its lenders. “Banks are increasingly trying to avoid a Cygnus or a Young Broadcasting scenario,” he told FOLIO:. “They have realized two things: First, that bankruptcy is a very bad outcome for a media business; and secondly, that the prospects for recovery and growth in 2010 and 2011 are excellent."

In January, Morris said it hired investment bankers Lazard Freres & Co. as financial advisor and Neal, Gerber & Eisenberg as legal counsel as the publisher explored its “strategic options” concerning the company’s capital structure. The company was said also to be exploring a sale of its portfolio of nearly 20 city magazines, including Augusta, Athens, H magazine and Savannah. UPDATE: A spokesperson representing Morris said the company "was not and is not" exploring a sale of its magazines.

Morris—an affiliate of the Morris Communications Company—also publishes 13 daily newspapers.