McClatchy tells bankruptcy court it needs additional time to finalize terms of sale
McClatchy Co. notified a federal bankruptcy judge late Wednesday that it needs more time to negotiate the terms of its sale to the New Jersey hedge fund that won the company at auction last week.
Chatham Asset Management was named Sunday as the winning bidder for the nation’s second largest local news company, and McClatchy said at the time that it expected to reach agreement on terms before the court’s 11:59 p.m. ET Wednesday deadline.
Instead, less than an hour before that deadline, McClatchy announced that a deal was close, but not yet done.
“The parties are still in the process of finalizing the transactional documents and expect to file such documents on or before Friday, July 17, 2020,” lawyers for McClatchy said in a filing that hit the court docket just after 11 p.m.
In a statement after the filing, McClatchy called the negotiations “a multiparty process.”
“All of us, along with Chatham, are working productively, around-the-clock, and there are very few details left to hammer out,” the statement said.
The delay is the third since July 8, when the auction was initially scheduled, then postponed twice. McClatchy did not disclose what the sticking points might be, and representatives for Chatham did not respond to an email seeking comment.
Judge Michael E. Wiles is scheduled to sign off on the agreement at a hearing July 24.
McClatchy fell short of negotiating a restructuring plan with its creditors ahead of filing bankruptcy Feb. 13, but said soon after that it had reached substantial agreement on major issues and hoped to exit quickly with Chatham as the new owner.
But as negotiations dragged on in court and the pandemic changed the economics of the deal, McClatchy turned to a second option: a sale to the highest bidder.
Now, five months into what has proved to be a costly bankruptcy case, McClatchy says it expects the sale to be finalized by the end of September.
Chatham, which has invested in McClatchy since 2009 and is now its largest lender, is majority owner of Canada’s largest news chain, Ottawa-based Postmedia Network Canada Corp. It also owns American Media, publisher of the National Enquirer.
If McClatchy and Chatham were to fail to reach agreement, Wiles could turn to a second hedge fund that offered a binding bid for McClatchy, Alden Capital Group. Alden is the majority owner of Colorado-based MediaNews Group and also owns a third of Tribune Co.
Alden, which has not commented on McClatchy’s announcement of Chatham as the winning bidder, has until Monday afternoon to challenge the bid process.
McClatchy was controlled by the founding McClatchy family for 163 years before declaring bankruptcy. The company owns media titles in 14 states and Washington, D.C., including the Miami Herald, the Kansas City Star, the Sacramento Bee, the Charlotte Observer, the (Raleigh) News & Observer and the Fort Worth Star-Telegram.
This story was originally published July 15, 2020 at 11:12 PM with the headline "McClatchy tells bankruptcy court it needs additional time to finalize terms of sale."
