Aug. 4, 2020 – U.S. Bankruptcy Court Judge Michael Wiles approved the sale of the McClatchy Company’s assets to Chatham Asset Management on Tuesday for $263 million in debt and $50 million in cash, with Chatham granting a new $87 million loan. The newspaper chain had filed for bankruptcy in February.
An attorney for McClatchy, Van Durrer II, said the amount was $100 million greater than the next closest bid from rival hedge fund Alden Global Capital. Alden did not participate in the hearing.
There were no changes to sections of the asset purchase agreement that dealt with labor issues. The sale agreement states that the new owner will offer employment to employees under “substantially the same terms and conditions” that McClatchy had been providing. The settlement agreement between McClatchy, the Creditors’ Committee, and Chatham provides that the final version of the asset purchase agreement must state the Chatham will assume all of McClatchy’s collective bargaining agreements.
The closing and approval is expected by mid-September, attorneys advised the court. The new owner is a holding company, SIJ Holdings, LLC.
As part of the overall settlement, the U.S. Government Pension Benefit Guarantee Corporation is expected to take over the McClatchy pension plan and will administer its benefits to pensioners. Guild-covered pension participants are not expected to be adversely impacted by the PBGC takeover.
The judge asked McClatchy and attorneys for a committee of unsecured creditors (including The NewsGuild) several questions, most of which had to deal with the structure of the debt transactions and various provisions of the agreement that sought to minimize liabilities. The parties agreed to modifications suggested by the court and a final order will be entered soon.
Creditors Committee Attorney Kristopher Hansen told Wiles that the committee supports the sale. The group had earlier asked the Court for permission to file a lawsuit against Chatham and McClatchy, but those claims in the potential lawsuit are now part of the transaction closing the transfer of assets. The creditors had argued, among other things, that the directors and officers of McClatchy had breached their fiduciary duty. Those claims are still unresolved, and may likely be resolved by insurance carriers.