At least 20 potential suitors are looking at buying all or part of McClatchy — the bankrupt owner of the Miami Herald, the Kansas City Star and the Sacramento Bee — and a federal judge wants the company back in court Monday to explain how it plans to run the sale.
The newspaper giant’s largest secured creditors, Chatham Asset Management and Brigade Capital Management, submitted a so-called stalking horse bid in mid-April said to be “well in excess” of $300 million.
In exchange for a 100 percent ownership stake in the company, the hedge funds are offering to swap $263 million in first-lien notes as well as $30 million in working capital and settlements with trade creditors and unsecured pensioners.
McClatchy, which filed for Chapter 11 in mid-February, said in court proceeding that it wants to make a sale relatively quickly since it worries the sale process could be damaged by the eroding media environment due to the coronavirus.
The proposed credit bid submitted by the hedge funds, McClatchy Chief Executive Craig Forman said, will allow one of the nation’s largest newspaper chains to remain one company while resolving its legacy debt and pension obligations.
Nevertheless, US Bankruptcy Court Judge Michael Wiles in a Wednesday hearing seemed annoyed that the process was underway without closer court supervision.
“I cannot say strongly enough how crazy that seems to me,” Wiles said, according to the account that McClatchy’s news service published. “Maybe you don’t trust what I will do with a sale process?”
“We are very confident that you will be satisfied with the process,” countered McClatchy’s chief lawyer in the proceedings, Van Durrer of Skadden, Arps.
A quick sale to the hedge fund creditors is worrisome to the 24,000 retirees and the Pension Benefit Guaranty Corp., which is pushing for an equity stake in a reorganized company if it is forced to take over the 75-year-old pension plan, which carries a liability of $530 million.
In a statement to Media Ink Thursday, Durrer said: “All stakeholders in McClatchy agree that an efficient reorganization and emergence provides the best outcome. We appreciate Judge Wiles’s encouragement for an agreed path forward, which we have already begun.”
Whoever buys McClatchy will take the publicly traded company private and end the involvement of the McClatchy family, which still controls the company. It could not be learned who might else might be among the potential other bidders.
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At least 20 suitors are looking to buy newspaper giant McClatchy - New York Post
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