McClatchy filed an asset purchase agreement with the U.S. Bankruptcy Court, formalizing the details of Chatham Asset Management’s successful bid for ownership of McClatchy in the Chapter 11 sale process.
The filing is a milestone in McClatchy’s reorganization and paves the way for a change in control of the 163-year-old news company. Under Chapter 11 rules, the proposed asset purchase is scheduled for consideration by the court for approval at a hearing on Aug. 4.
Under the agreement, Chatham will acquire McClatchy for $263 million in a credit bid of the company’s first-lien debt, plus a new money consideration of $49 million in cash and the assumption of additional liabilities.
The agreement outlines that the entirety of the 30 McClatchy news organizations will move to the new ownership structure. All employees will be offered their current jobs with new McClatchy, with equivalent compensation, benefits and full credit for service years. The agreement also provides that the new McClatchy will honor all current collective-bargaining agreements.
“This important step towards a resolution of our reorganization will provide greater certainty and stability to the wider group of employees and stakeholders who benefit from a restructured McClatchy,” Craig Forman, president and CEO of McClatchy, said. “Today’s agreement brings McClatchy one step closer to a future on strong financial footing where it can continue to provide necessary, civic-minded journalism to local communities nationwide.”
As part of the transition, Kevin McClatchy, chairman of McClatchy, and Forman will depart the company when the transaction closes by the end of the third quarter.
“For over a century and a half, our family has owned and operated our local news brands, these important civic institutions, to ensure thriving independent local journalism in the public interest,” McClatchy said. “The McClatchy family’s time as proprietors spans this nation’s history from the Gold Rush and the Pony Express to the moon landings to the modern mobile internet. While it will be humbling to pass the torch, we want to thank our employees, readers, communities and Chatham for recognizing the value of the public-service role of local journalism and supporting its mission.”
McClatchy has served on the board since 1998 and led it as chairman for eight years. He owned and led the Pittsburgh Pirates for 11 years before selling the team in 2007. He was recently named co-chair of the board of amFAR, The Foundation for AIDS Research.
“It will be tough and more than bittersweet to say farewell. Across seven generations, local journalism is baked into our family’s DNA. But we do so with thanks, and wish Chatham Asset Management continued success,” McClatchy said. “I want to offer my thanks as well to Craig Forman for his leadership and the dedicated members of the board who have contributed their expertise and guidance to the management team over the decades.”
Forman joined the McClatchy board in 2013 and at its request stepped into the president and CEO role in 2017 to accelerate the company’s digital transformation. Under Forman’s leadership, McClatchy reached 40% year-over-year growth in digital-only subscribers and is on track to reach nearly 700,000 paid digital customer relationships. McClatchy now has more than 260,000 digital-only subscribers, up nearly 400% from when Forman became CEO.
“We wasted no time in the past three years transforming McClatchy into a profoundly digital company, equally balanced between subscription and advertising revenue, enhancing our reputation for essential journalism and products and services vital in our 30 communities,” Forman said. “This transaction provides a needed resolution to McClatchy’s legacy debt and pension issues by restructuring the balance sheet and capital structure through a voluntary reorganization under Chapter 11 protection.
“As a former journalist, I was motivated to ensure a sustainable future for this great and essential company. Now, Chatham as new owners will come in to build on the strong foundation this team has put in place. With thanks to my tireless colleagues and the McClatchy family, I see no reason to delay my return to Silicon Valley when the company transitions to new ownership, to pursue the next challenge in the future of technology, media and telecom.”
“Craig Forman has been exactly the leader McClatchy needed at exactly the right time,” McClatchy said. “He guided us through a series of significant challenges, and thanks to Craig’s smart and strategic leadership, we have a go-forward digital-first company properly focused on our audience and the sustainable future of local news, which will continue to serve our communities for years to come.”
McClatchy operates 30 media companies in 14 states.
