Berkshire Hathaway Inc. (NYSE: BRK.A and BRK.B) agreed to purchase the newspapers owned by Media General Inc., with the exception of the Tampa group, for $142 million in cash.

Media General said it is in discussions with other prospective buyers for its Tampa print assets. Berkshire Hathaway, headquartered in Omaha, Neb., is facilitating the deal through its subsidiary BH Media Group. The deal includes 63 daily and weekly newspapers in Virginia, North Carolina, South Carolina and Alabama.

Under a separate credit agreement, Berkshire Hathaway will also provide Media General with a $400 million term loan and a $45 million revolving credit line. The new eight-year loan will be used to fully repay the company’s existing bank $364 million in bank debt due March 2013.

Media General, which is rated CCC+ by Standard & Poor’s, was in danger of payment default. In February the company temporarily amended its senior secured credit agreement after weaker-than-expected digital and print revenue caused its cushion of compliance with covenants to narrow to very thin levels at the end of 2011.

The $400 million first lien term loan will have an interest rate of 10.5 percent, which could step down to 9 percent if total leverage were to reach 3.50 times. It will be issued at a discount of 11.5 percent and is secured pari passu with the company’s existing 11.75 percent senior secured notes due 2017.

The new credit agreement is expected to close no later than May 24.

In conjunction with this second transaction, Media General will issue Berkshire Hathaway penny warrants for approximately 4.6 million Class A shares, which represents 19.9 percent of Media General’s existing shares outstanding.

Marshall Morton, president and chief executive officer of Media General, said the company’s sale of its newspaper businesses “accelerates the timing of our strategy to focus on our broadcast television business and its future growth opportunities, including digital content and Mobile DTV.”

Morton also said the new credit agreement addresses Media General’s long-term capital needs and provides the company with significant financial and operating flexibility.

Richmond, Va.-based Media General now expects total cash interest expense in 2012 will be approximately $67 million. Total interest expense, including non-cash amortization of issue discount, new issuance fees, and the warrants, is expected to be $80 million in 2012.

Media General’s financial adviser is Peter J. Solomon Co. JP Morgan Chase was the sole arranger and syndication agent on financing. The transaction is expected to close on June 25.

Allison Bisbey reports for Leveraged Finance News