On February 13, 2020, we announced that we commenced a restructuring under Chapter 11 of the U.S. Bankruptcy Code to provide McClatchy with immediate protection while we pursue approval of our proposed restructuring plan and work to definitively address the Company’s funded debt, strengthen our balance sheet, and address our pension obligations moving forward.
We initiated this process following active restructuring negotiations with the Pension Benefit Guaranty Corporation (PBGC), the federal agency that guarantees benefits under McClatchy’s qualified pension plan, and our largest secured creditor to address the future of our pension obligations and capital structure, which were previously disclosed in the Company’s press release dated November 13, 2019 and extended as part of McClatchy’s January 15, 2020 standstill agreement with the PBGC.
Since we filed our voluntary Chapter 11 reorganization case, the world has changed. The extraordinary circumstances posed by the unfolding COVID-19 pandemic and associated global economic challenges have added to headwinds for our efforts to move through this process swiftly as planned.
Earlier this month, McClatchy began soliciting proposals to acquire the Company through our voluntary Chapter 11 restructuring. On April 16, we announced that we received a non-binding offer to purchase the company through our voluntary Chapter 11 restructuring from funds owned by Chatham Asset Management and Brigade Capital Management. Importantly, under terms of the proposal, 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.
Our Board of Directors and management team is confident that this is the best option for a swift resolution that maximizes outcomes for our stakeholders. This restructuring process allows us to continue our digital transformation and operate without the limitations of our capital structure and pension payment obligations from another era. In addition, we expect that, once completed, 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. To be clear, our finances continue to be sufficient to fund McClatchy’s operations, even amid the extraordinary circumstances posed by the unfolding COVID-19 pandemic and associated global economic challenges.
Throughout this process, we will maintain the same unwavering commitment to delivering the strong, independent journalism that is essential to our local communities.
The media industry has been under tremendous pressure for years. Technological advances, consumer-behavior shifts, and business-model challenges are among the many disruptive forces affecting the media business. We believe the actions we have taken are an important step to ensure a strong future for McClatchy, and we look forward to emerging from this process having addressed our legacy debt and pension obligations. At that time, we expect to be even better positioned to advance our digital transformation and continue delivering essential local news to our subscribers and readers in the communities we serve.
In the meantime, we are committed to keeping our stakeholders updated throughout this process. To start, on this website, you have access to additional information, FAQs, and other resources to help you better understand this process.
Chief Executive Officer, McClatchy