Hedge fund Chatham Asset Management said it plans to buy newspaper publisher McClatchy out of bankruptcy, ending 163 years of family control. McClatchy publishes The News & Observer and Herald Sun in the Triangle as well as the Charlotte Observer.
The hedge fund did not put a price on the deal. The agreement still needs the approval of a bankruptcy judge.
“From the outset of this voluntary Chapter 11 filing, our aim was to permanently address both the Company’s legacy debt and pension obligations and strengthen our balance sheet in order to provide greater certainty and stability to the wider group of our colleagues and stakeholders who benefit from a restructured McClatchy,” said Craig Forman, President and CEO of McClatchy, in a statement.
“We’re pleased that Chatham and the supportive secured first-lien creditors believe in our business and our mission and are helping to achieve these goals. Local journalism has never been more vital and we remain steadfast in our commitment to delivering on our mission and continuing to serve our communities.”
McClatchy is one of the largest newspaper companies in the U.S. It owns 30 papers including the Miami Herald, the Charlotte Observer and the Sacramento Bee. It filed for bankruptcy protection because of a heavy debt load stemming from its $4.5 billion purchase of the Knight-Ridder newspaper chain in 2006, just as the newspaper industry went into steep decline.
Chatham was McClatchy’s largest shareholder and debt holder. It beat out a bid from Alden Global Capital, another hedge fund that has taken a leading role in the U.S. newspaper business.
“Under the terms of the bid, Chatham is expected to become the majority owner in the third quarter of the year, and the publicly traded McClatchy will become a private company. It will also not be split up, the company said, with its 30 news outlets remaining intact,” The New York Times reported.
