A New Jersey-based hedge fund is poised to become owner of McClatchy, the publisher of the Centre Daily Times and 29 other newspapers.
Chatham Asset Management had the successful bid in a court-supervised auction to buy the bankrupt newspaper chain, McClatchy announced on Sunday. The sale price was not disclosed but Chatham, McClatchy’s largest creditor, previously said it would submit a bid of $300 million in debt forgiveness and cash.
McClatchy — the nation’s second largest daily newspaper chain and owner of papers such as the such as the Miami Herald, Sacramento Bee and Kansas City Star — filed for Chapter 11 bankruptcy protection in February, citing legacy debt stemming from its purchase of the Knight Ridder chain in 2006 and underfunded pension obligations.
‘From the outset of this voluntary Chapter 11 filing, our aim was to permanently address both the company’s legacy debt and pension obligations and strengthen our balance sheet in order to provide greater certainty and stability to the wider group of our colleagues and stakeholders who benefit from a restructured McClatchy,’ Craig Forman, McClatchy president and CEO said in a statement. ‘We’re pleased that Chatham and the supportive secured first-lien creditors believe in our business and our mission and are helping to achieve these goals. Local journalism has never been more vital and we remain steadfast in our commitment to delivering on our mission and continuing to serve our communities.’
The sale still requires confirmation from U.S. Bankruptcy Court, which is expected to take place at a July 24 hearing, as well as regulatory approvals.
Chatham is also the majority owner of Canadian Media Conglomerate Postmedia Network Canada Corp as well as American Media Inc., which, publishes the National Enquirer, among other publications.
McClatchy originally sought to restructure its debt with Chatham as its owner, but subsequently opted to put itself up for sale through auction. Chatham won the auction on Friday, despite a challenge to its starting bid by Alden Capital Group, another hedge fund which owns Media News Group and is the largest shareholder of Tribune Publishing.
McClatchy expects that following the sale the company will exit Chapter 11 in the third quarter of 2020.
The publicly traded company will go private under Chatham ownership and it will not split up its 30 newspapers.
The CDT was among the newspapers acquired by McClatchy when it purchased Knight Ridder for $6.5 billion in 2006. The acquisition came at a time of growth for McClatchy but was almost immediately followed by a digital media boom and a cratering of print advertising. The challenge of shifting from legacy print to digital was exacerbated in the mid-2010s as Google and Facebook began to corner the market on digital advertising.
