McClatchy has received a proposal from holders of most of its senior secured debt for the acquisition of the company, consistent with its continued restructuring process.
Earlier this month, the second-largest local newspaper company in the United States began soliciting proposals to acquire the company through its voluntary Chapter 11 restructuring. Yesterday, two of McClatchy's senior secured lenders submitted a non-binding term sheet to acquire the company in a credit-bid of the company's first-lien debt of $263 million, plus new money consideration of $30 million, the assumption or refinancing of the company's ABL revolver and the assumption of substantially all amounts owed to the company's go-forward trade vendors.
Under terms of the proposed credit bid, McClatchy would remain one company, which will emerge from Chapter 11 having resolved its legacy debt and pension obligations, just as it set out to at the start of this process. In addition, the company expects that this process will provide certainty to qualified pension plan participants and to the wider group of employees and stakeholders who benefit from a restructured McClatchy. The company's board of directors will evaluate the term sheet received from Chatham Asset Management and Brigade Capital Management, against other proposals it may receive in the process.
"We appreciate the support of our principal existing lenders, who have come to the table with an offer that is generally consistent with our goals of addressing our legacy balance sheet issues and emerging from Chapter 11 as a viable going concern, while continuing to provide strong independent, local journalism in the public interest," said Craig Forman, president and chief executive officer. "Our mission of producing essential local news and information for the communities we serve has never been more vital. The interest in our business and mission reflects this, with more than 20 parties already under NDA and engaged in our process."
As previously disclosed, McClatchy and its 30 local newsrooms continue to operate as usual, and the company is fulfilling its commitments to its stakeholders. The company's undrawn debtor-in-possession financing and normal operating cash flows continue to be sufficient to fund its ordinary-course operations, as well as the restructuring process, even amid the extraordinary circumstances posed by the unfolding COVID-19 pandemic and associated global economic challenges.
Earlier this month as the growing scale of the pandemic became clear, McClatchy requested bankruptcy court approval of enhanced liquidity measures designed to moderate the costs of the case, reduce expenses and enhance the success of the emergence process. The company will provide updates when definitive documentation is entered into, but does not anticipate interim updates.
