FEBRUARY 12, 2020 — McCLATCHY PULLS TE TRIGGER: FILES CHAPTER 11 BANKRUPTCY
The filing will allow McClatchy to restructure its debts and possibly relieve the company of the majority of its pension obligations. Not good news for former McClatchy employees. It has been suggested that there are ten pension-holders for every single active employee.
Even worse for current employees is that should the Bankruptcy Court approve, the debtor in possession will be the hedge fund Chatham Asset Management.
As for the common stock holders, it is likely that the shares will be canceled and the company be run as a privately-owned company for the benefit of secured creditors.
The company is spinning the bankruptcy as an opportunity to transition from analog paper to digital news products.
Look for chaos, confusion, and confrontation as the matter works its way through the high-priced lawyers.
NOVEMBER 18, 2019 — WARNING: COMPANY WARNS OF POSSIBLE 2020 BANKRUPTCY
The footnotes to the company’s 10-Q filing with the Securities and Exchange Commission is not promising which puts McClatchy’s 30 newspapers at risk of being acquired in a bankruptcy by its creditors.
“From the filing …
Going Concern
For the nine months ended September 29, 2019, we reported a net loss of $364.2 million.
As of September 29, 2019, we had a working capital deficit of $152.8 million, of which $108.7 million is attributable to minimum required contributions to our qualified defined benefit pension plan coming due in the next twelve months.
We face liquidity challenges relating to the minimum required contributions in fiscal year 2020 to our Pension Plan. These required contributions are estimated to be approximately $124.2 million, which would be paid in installments beginning in January 2020 with the bulk of those payments due September 15, 2020, or afterwards.
To address our liquidity needs and the going concern uncertainty, in June 2019 we filed an application for a waiver of the minimum required contributions under the Pension Plan in accordance with section 412 of the Internal Revenue Code for the 2019, 2020 and 2021 plan years with the Internal Revenue Service (“IRS”). In early November 2019, the IRS declined to grant us our three-year waiver request.
We continue to explore other means of pension relief, including working with many members of Congress in search of legislative relief that would mitigate the burden of the minimum required contributions. We have also consulted with the Pension Benefit Guaranty Corporation (“PBGC”) to discuss measures allowed under existing regulations to provide a more permanent solution, such as a distress termination of the Pension Plan. A distress termination would allow us to continue to operate and relieve the current liquidity pressures of the minimum required contributions under Employee Retirement Income Security Act ("ERISA"). However, there can be no assurance that the ongoing discussions with Congress and/or the PBGC will result in any relief including a restructuring transaction, or that such relief will occur on a timely basis or at all.
In addition to seeking pension relief, we are engaged in discussions with our largest debt holder, regarding the recapitalization of our balance sheet and outstanding debt obligations and the formulation of a restructuring plan that would provide a more permanent, rather than temporary, solution. No agreement has been reached with respect to the above discussions and discussions remain ongoing. We will continue to work collaboratively with our constituents to achieve the goals of our business plan and balance the interests of a wide range of stakeholders. However, there can be no assurance that the ongoing discussions with our debt holder will result in any restructuring transaction, that we will obtain any required stakeholder consent to consummate a restructuring transaction, or that the restructuring transaction will occur on a timely basis or at all.
In conjunction with all of these efforts to address our liquidity pressures, we have engaged the financial and legal services of Evercore Group L.L.C., FTI Consulting, Inc., Skadden, Arps, Slate, Meagher & Flom LLP and the Groom Law Group, Chartered (collectively, “Advisors”), who are all assisting us in evaluating and executing available transactions with our stakeholders.
We believe we have taken and are continuing to take prudent actions to address our ability to continue as a going concern; however, there is no assurance that such alternatives will be available on terms acceptable to us, in a timely manner or at all, or our plans will fully mitigate the liquidity challenges we face because some matters are not within our control. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or liabilities that might be necessary should we be unable to continue as a going concern.
NYSE American Continued Listing Status
On September 9, 2019, we received written notification from NYSE American LLC ("NYSE American") indicating that we were not in compliance with certain listing standards. We have approximately 18 months from the receipt of the notice to become compliant under a plan that is subject to approval by NYSE American.
We submitted a plan to NYSE American on October 9, 2019, advising how we plan to regain compliance with the continued listing standards by March 9, 2021. If NYSE American does not accept the plan, NYSE American will initiate delisting procedures. If NYSE American accepts our plan, our common stock will continue to be listed and traded on NYSE American during the cure period, subject to our compliance with the plan and other continued listing standards.”
Original Post…
Sacramento, California-based McClatchy Company, a publishing company operating 29 daily newspapers in fourteen states, has announced a reduction in force with approximately 10-percent of employees being offered a voluntary buyout before proceeding to involuntary layoffs.
Approximately 450 employees will be affected. Following the failure to complete a buyout of the Tribune Company, it appears that McClatchy is restructuring and reducing costs. According to a McClatchy spokesperson, "We are changing the size of the workforce to align with the revenue."
Excerpts from an email sent to company employees from McClatchy CEO Craig Forman…
Central to our transformation is accelerating our revenue potential. With that in mind, we are rolling out two major initiatives:
Driving our company to a functionally-based organizational structure in targeted strategic areas;
Launching a voluntary early retirement program for qualified colleagues, as we continue to align the size of our workforce to the changes that come with digital transformation.
Thanks to our efforts in centralization and regionalization, a number of our groups are already organized by function — such as finance and the people teams — and now we’re taking a page from such digital companies as Google and Microsoft to further group teams by expertise. This will accelerate decision making, increase professional skills development and create operational efficiencies. Bringing together the talents and energy of like-minded colleagues will create new energy and innovation to apply to our revenue challenge.
Voluntary Early Retirement Program
Approximately 450 of our colleagues will receive a voluntary early retirement offer today via email. Colleagues who receive an offer will have the opportunity to participate in webinars and consult with representatives of the People team directly, to determine if this opportunity is right for them and their families. We’ve taken this action with intention, deliberation and respect for the contributions these colleagues have made to our company. It is important to us that they are empowered to decide the next steps on their career paths. This will be a one-time opportunity; we do not anticipate another voluntary early retirement program. Deadline for electing to participate in the program is February 19, 2019.
Forward Steps
The changes outlined above will help us get to growth faster in a digital company that will be smaller for the foreseeable future. They are the culmination of the enormous progress McClatchy has already made in our transition to a digital future; progress that in many ways has paced the industry and would not have been possible without the effort, talent and dedication of the people reading this note.
But I’m also aware that transitions are stressful. Our mission to transform our company is vitally important, but never easy. With that in mind, I want to extend a sincere thank you to everyone at McClatchy, our #OneTeam. Your passion for local journalism and the benefit it brings to our communities — and our democracy — is what binds us all together. It’s the purpose of McClatchy, and it’s never been more important.
Thank you for being part of our success in this journey and we appreciate your continued collaboration, diligence and flexibility.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?
