McClatchy has settled claims by various unsecured creditors, clearing away a final impediment to its sale to hedge fund Chatham Asset Management.
The previously announced sale for $312 million earned final approval in federal bankruptcy court Tuesday afternoon after the agreement Monday evening.
The claims resolution does not specify what a committee of creditors will ultimately receive. Rather it will create a new “trust” through which the group can pursue recovering what they say they are owed.
The trust will mainly be funded through an expected 2020 tax refund and legal insurance the company carries. That decouples the claims from the sale itself.
By settling, the creditors have waived pursuing legal action alleging that McClatchy and Chatham had engaged in a “fraudulent transfer” when debt was consolidated and refinanced in mid-2018.
The deal is scheduled to close by Sept. 4. As previously announced, CEO Craig Forman will be departing. Chatham has said it intends to keep all 30 McClatchy newspapers, which include The Miami Herald and Charlotte Observer, together as a company.
Chatham also said that it will keep staffing at current levels and honor existing union contracts.
The Pension Benefit Guaranty Corporation, a federal insurer, will take over McClatchy’s pension plan, which covers 24,000 current and retired employees.
The PBGC has been a member of the committee of unsecured creditors. The group also includes roughly 600 retired executives who were receiving bonus pension payments, abruptly discontinued at the start of this year.
Chatham outbid another hedge fund, Alden Global Capital. McClatchy said that Alden’s bid envisioned eliminating about 1,000 of 2,800 jobs.
Rick Edmonds is Poynter’s media business analyst. He can be reached at redmonds@poynter.org.
This article was updated after the sale was approved Tuesday afternoon.
