SACRAMENTO, Calif.,
Jan. 15, 2020 /PRNewswire/ --
McClatchy (NYSE American-MNI) announced today that it has entered
into a Standstill Agreement with the Pension Benefit Guaranty
Corporation (PBGC), extending its current runway for negotiating a
consensual restructuring with key stakeholders.
As previously disclosed in the Company's press release dated
November 13, 2019, McClatchy has been
in active restructuring negotiations with substantially all of its
secured lenders and bondholders, as well as the PBGC, to address
the future of its pension obligations and capital structure. The
negotiations contemplate one or more deleveraging transactions,
including some or all of the Company's Second Lien Term Loans and
Third Lien Notes, which are secured by second and third liens on
substantially all of the Company's assets.
In support of these negotiations, McClatchy has entered into
non-disclosure agreements with lenders holding approximately 87
percent of the Company's First Lien Notes and 100 percent of the
Company's Second Lien Term Loans and Third Lien Notes. These
conversations are ongoing and productive, and the Standstill
Agreement will allow McClatchy, as well as its lenders, the PBGC,
and their respective legal and financial advisors, time to continue
their negotiations.
"We want to acknowledge our lenders and the PBGC for working
collaboratively and negotiating in good faith to reach a consensus
on these important financial matters, which underpin McClatchy's
continuing commitment to publishing independent journalism in the
public interest," said Craig Forman,
President and CEO of McClatchy. "We look forward to continuing to
partner with these groups to reach an agreement that is in the best
interests of our 24,000+ pension plan participants and other
stakeholders, and positions McClatchy for the future. We remain
focused on executing our strategy of digital transformation and
producing strong, independent, local journalism that is essential
to the 30 communities we serve."
Under the terms of the Standstill Agreement, the PBGC has agreed
not to exercise the remedies available to it as a result of
McClatchy not making its scheduled qualified pension contribution
due on January 15, 2020. Under the
Standstill Agreement, the PBGC has agreed to a forbearance period
until February 18, 2020, unless
terminated earlier, subject to customary terms and conditions. In
addition, McClatchy is availing itself of its option to defer
paying interest on its secured debt for its contractual 30-day
grace period, which is coterminous with the Standstill Agreement.
There will be no impact on the qualified pension plan or payments
thereunder as a result of the Standstill Agreement.
McClatchy is working towards a permanent solution under which
the PBGC would assume McClatchy's qualified pension plan and
continue to pay the Company's pension plan participants their
benefits. Under current regulations, McClatchy believes that such a
solution would not have an adverse impact on qualified pension
benefits for substantially all participants. The assets of the
qualified pension plan are estimated at $1.375 billion as of December 31, 2019, including
approximately $580 million of voluntary contributions
made by McClatchy, substantially greater than the
contributions required by law.
As previously disclosed, on January 2,
2020, the Company announced that, as part of the ongoing
negotiations, it would not release certain
supplemental executive retirement benefits. Today's
action is consistent with withholding payments on the non-qualified
plan.
McClatchy and its newsrooms are operating as usual. The Company
has sufficient liquidity to address all of its ordinary course
operational cash needs and obligations at this time. There can be
no assurance that the ongoing discussions will result in any
restructuring transaction, that the company will obtain any
required stakeholder consent to consummate a restructuring
transaction, or that the restructuring transaction will occur on a
timely basis or at all.
About McClatchy
McClatchy operates 30 media companies in 14 states, providing
each of its communities with strong independent local journalism in
the public interest and advertising services in a wide array of
digital and print formats. McClatchy publishes iconic local brands
including the Miami Herald, The Kansas City Star,
The Sacramento Bee, The Charlotte Observer,
The (Raleigh) News &
Observer, and the Fort Worth Star-Telegram. McClatchy is
headquartered in Sacramento,
Calif., and listed on the New York Stock Exchange American
under the symbol MNI. #ReadLocal
Additional Information
Statements in this press release regarding the success of our
restructuring efforts with PBGC, our lenders, and our bondholders,
the sufficiency of the company's liquidity to address all of its
ordinary course operational cash needs and obligations, and any
other statements about management's future expectations, beliefs,
goals, plans or prospects constitute forward-looking
statements as defined in the Private Securities Litigation
Reform Act of 1995. Any statements that are not statements of
historical fact (including statements containing the words
"believes," "plans," "anticipates," "expects," "estimates" and
similar expressions) should also be considered to be
forward-looking statements. There are a number of important
risks and uncertainties that could cause actual results or events
to differ materially from those indicated by such forward-looking
statements, including: we may not generate cash from
operations, or otherwise, necessary to meet our liquidity needs or
obligations; our restructuring efforts rely on coming to terms with
multiple parties who may have conflicting interests; our ability to
borrow under our credit agreement is contingent on our ability to
meet the conditions set forth therein at such time; we may
experience diminished revenues from advertising; we may not achieve
our expense reduction targets including efforts related to legacy
expense initiatives or may do harm to our operations in attempting
to achieve such targets; our operations have been, and will likely
continue to be, adversely affected by competition, including
competition from internet publishing and advertising platforms;
increases in the cost of newsprint; litigation or any potential
litigation; geo-political uncertainties including the risk of war;
changes in printing and distribution costs from anticipated levels,
including changes in postal rates or agreements; changes in
interest rates; increased consolidation among major retailers in
our markets or other events depressing the level of advertising;
competitive action by other companies; and other factors, many of
which are beyond our control; as well as the other risks listed in
the company's publicly filed documents, including the company's
Annual Report on Form 10-K for the year ended December 30,
2018. In order to effectuate our restructuring, we may be
required to seek protection under Chapter 11 of the US Bankruptcy
Code. These forward-looking statements speak as of the time
made and, except as required by law, we disclaim any intention and
assume no obligation to update the forward-looking information
contained in this release.
Contact
Media
Jeanne
Segal
|
FTI
Consulting
|
202-383-6085
|
Rachel Chesley / Lou
Colasuonno / Ryan Toohey
|
jsegal@mcclatchy.com
|
212-850-5681
|
|
McClatchy@fticonsulting.com
|
Investors
Stephanie
Zarate
|
916-321-1931
|
szarate@mcclatchy.com
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/mcclatchy-enters-into-standstill-agreement-with-the-pbgc-300987847.html
SOURCE McClatchy