Newspaper chain McClatchy, owner of publications including the Miami Herald and Kansas City Star, is closer to transferring ownership to its largest shareholder.
New Jersey-based hedge fund Chatham Asset Management was the successful bidder in a court-supervised auction as part of its bankruptcy, McClatchy announced in a news release Sunday.
McClatchy filed for Chapter 11 bankruptcy protection in February after grappling with a pension crisis and the news industry's financial challenges. The filing was before the COVID-19 pandemic hit, which has affected newspaper companies nationwide.
The McClatchy family has controlled the Sacramento, California-based company for more than 160 years. The release said the proposed agreement will be finalized and filed with the U.S. Bankruptcy Court in the coming days.
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Since McClatchy's acquisition in 2006 of newspaper chain Knight-Ridder, which was purchased with $5 billion in debt, the company has suffered from the same factors affecting traditional news media companies.
McClatchy "will transition out of Chapter 11 as it entered it: in its totality, as one company serving 30 communities across America," according to the release. Its other properties include The Charlotte Observer and The Sacramento Bee.
"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, the newspaper chain's president and CEO, said in the release.
The company said it hopes to exit Chapter 11 in the third quarter of 2020, "having achieved a resolution and restructuring of the Company's complex legacy debt and pension obligations, while maximizing value for the Company's creditors."
A hearing in the bankruptcy case is scheduled for July 24.
In a statement sent to USA TODAY, the NewsGuild-Communications Workers of America said it stressed “how crucial it is for the winning bidder to develop a constructive relationship with the Guild and its members.”
The labor union said it joined the committee of unsecured creditors and asked for adoption of collective bargaining agreements.
“We are deeply concerned that this venerable newspaper chain – which has won 54 Pulitzer Prizes – will now transfer to the ownership of a hedge fund more known for its drive to maximize profits than for its commitment to producing quality journalism,” said Marian Needham, the NewsGuild’s executive vice president.
Contributing: Nathan Bomey
Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko
This article originally appeared on USA TODAY: Chatham Asset Management wins big in McClatchy bankruptcy auction