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The McClatchy newspaper chain, the owner of publications including the Miami Herald and the Kansas City Star, is in the process of transferring ownership to its largest shareholder.
New Jersey-based hedge fund Chatham Asset Management was the successful bidder in a court-approved auction as part of its bankruptcy, McClatchy announced in a news release Sunday.
McClatchy applied for Chapter 11 bankruptcy protection in February after struggling with a pension crisis and the financial industry’s financial challenges. The submission was made before the pandemic group COVID-19, which has affected newspaper companies across the country.
The McClatchy family has controlled Sacramento, California-based companies for more than 160 years. The exemption said the proposed agreement will be finalized and filed with the US Bankruptcy Court in the coming days.
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Since McClatchy’s 2006 acquisition of the Knight-Ridder newspaper chain, which was purchased with $ 5 billion in debt, the company has suffered from the same factors affecting traditional news media companies.
McClatchy “will transition from Chapter 11 when it went into it: in its entirety, as a company serving 30 communities across America,” according to the release. Its other properties include The Charlotte Observer and The Sacramento Bee.
“From the beginning of this voluntary filing of Chapter 11, our goal was to permanently address both the company’s inheritance debts and pension obligations and strengthen our balance sheet to provide greater security and stability to the broader group of our colleagues and stakeholders who benefit from a restructured McClatchy,” said Craig Forman, newspaper chain president and CEO, in the release.
The company said it hopes to leave Chapter 11 in the third quarter of 2020, “after achieving a resolution and restructuring of the company’s complex inheritance debt and pension obligations, while maximizing the value of the company’s creditors.”
A hearing in the bankruptcy case is scheduled for July 24.
In a statement sent to the US TODAY, NewsGuild-Communications Workers of America said it emphasized “how crucial it is for the winning bidder to develop a constructive relationship with the guild and its members.”
The union said it joined the Committee for Unsecured Creditors and asked for the adoption of collective bargaining agreements.
“We are deeply concerned that this valuable newspaper chain – which has won 54 Pulitzer Prizes – will now switch to owning a hedge fund that is better known for its efforts to maximize profits than for its commitment to producing quality journalism,” said Marian Needham , NewsGuild’s CEO.
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