NEW YORK, Feb. 14, 2020 /PRNewswire/ -- McClatchy announced today that the U.S. Bankruptcy Court for the Southern District of New York has granted the Company approval for its first day motions related to its voluntary Chapter 11 petitions filed on February 13, 2020.
The Court granted McClatchy interim approval of the $50 million debtor-in-possession financing from Encina Business Credit, including immediate access to $12.5 million, which, alongside the Company's normal operating cash flows, allows McClatchy sufficient liquidity to fulfill commitments to stakeholders and operate as usual throughout the restructuring process. Among other approvals, the Court has authorized McClatchy to continue paying ordinary course employee wages and providing benefits – including health insurance, paid time off, and 401(k) programs – without interruption; honor obligations to advertisers, distribution partners, and customers and continue to operate customer programs in the ordinary course of business; reimburse business expenses as well as maintain the use of corporate credit cards consistent with typical Company policy; and make payments to go-forward vendors in full under normal terms for goods and services provided on or after February 13, 2020.
Craig Forman, President and Chief Executive Officer, stated of the milestone, "The Court's approval of our first day motions is a key step in our Chapter 11 case that enables us to continue supporting our employees, vendors, advertisers, and the 30 communities we serve as we pursue a permanent resolution to legacy debt and pension obligations. These approvals ensure that, throughout this process and beyond, McClatchy can continue to focus on our unwavering commitment to strong, independent local journalism that is essential to the communities we serve. We are operating as usual and taking the next step toward a stronger future for McClatchy."
The Company is hopeful that it will soon begin mediation with its lenders and the Pension Benefit Guaranty Corporation so the parties can reach a resolution and provide greater certainty to McClatchy's stakeholders.
Additional information about McClatchy's restructuring can be found by visiting the Company's dedicated site at https://McClatchyTransformation.com. In addition, legal filings and other information related to the Chapter 11 case are available at www.kccllc.net/McClatchy, or by calling KCC, the Company's noticing and claims agent, at +1 (866) 810-6898.
McClatchy is advised in this process by Skadden, Arps, Slate, Meagher & Flom, LLP, Groom Law Group, Chartered, and Togut, Segal and Segal as legal advisors and Evercore Group L.L.C. and FTI Consulting, Inc. as financial advisors.
McClatchy operates 30 media companies in 14 states, providing each of its communities with strong independent local journalism in the public interest and advertising services in a wide array of digital and print formats. McClatchy publishes iconic local brands including the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News & Observer, and the Fort Worth Star-Telegram. McClatchy is headquartered in Sacramento, Calif. #ReadLocal
Statements in this press release regarding results of operations, cash flow or financial condition, future financial and operating results, including our restructuring efforts with PBGC, our lenders, and our bondholders, and any other statements about management's future expectations, beliefs, goals, plans or prospects constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. There are a number of important risks and uncertainties that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the effects of the Bankruptcy Court rulings in the Chapter 11 proceedings and the outcome of the proceedings in general; the length of time the Company will operate in the Chapter 11 proceedings; our restructuring efforts rely on coming to terms with multiple parties who may have conflicting interests; the potential adverse effects of Chapter 11 proceedings on the Company's liquidity or results of operations or its ability to pursue its business strategies; increased levels of employee attrition during the Chapter 11 proceedings; we may experience diminished revenues from advertising; we may not achieve our expense reduction targets including efforts related to legacy expense initiatives or may do harm to our operations in attempting to achieve such targets; our operations have been, and will likely continue to be, adversely affected by competition, including competition from internet publishing and advertising platforms; increases in the cost of newsprint; litigation or any potential litigation; geo-political uncertainties including the risk of war; changes in printing and distribution costs from anticipated levels, including changes in postal rates or agreements; changes in interest rates; increased consolidation among major retailers in our markets or other events depressing the level of advertising; competitive action by other companies; and other factors, many of which are beyond our control; as well as the other risks listed in the Company's publicly filed documents, including the Company's Annual Report on Form 10-K for the year ended December 30, 2018. While it is not the Company's preferred outcome, in the event that the various stakeholders cannot agree to a timely and viable plan of reorganization, the Company would likely be required to consider other alternatives, including a competitive marketing process in order to obtain the maximum recovery for all of its stakeholders. These forward-looking statements speak as of the time made and, except as required by law, we disclaim any intention and assume no obligation to update the forward-looking information contained in this release.
Rachel Chesley / Lou Colasuonno / Ryan Toohey
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