McClatchy seeks approval of bid procedures and exclusivity extension

By Caroline Salls

Pittsburgh, May 6 – The McClatchy Co. requested court approval of the bid procedures for the proposed sale of substantially all of its assets, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

The company said it now faces new commercial challenges caused by the ongoing novel coronavirus pandemic, which have had a negative impact on its projected liquidity, as have administrative expenses.

As a result, McClatchy said it decided last month that a dual-track path, continuing to advance plan negotiations while simultaneously exploring strategic transactions, would be the best opportunity to realize a value-maximizing transaction in advance of any liquidity shortfall.

According to the bid procedures motion, the company will evaluate a previously announced non-binding term sheet from Chatham Asset Management LLC and Brigade Capital Management, LP in accordance with the bid procedures.

Chatham and Brigade are offering to acquire McClatchy through a credit-bid of $263 million of first-lien debt, plus new-money consideration of $30 million, the assumption or refinancing of the company’s ABL revolver and the assumption of substantially all amounts owed to go-forward trade vendors.

Under the proposed sale procedures, indications of interest must be submitted by May 12, and final binding bids would be due by July 1.

An auction would be held on July 8, if necessary, and the projected date for a sale approval or plan confirmation hearing is July 23.

The minimum overbid amount at auction would be $1 million.

In addition, McClatchy asked the court to extend its exclusive periods for filing and soliciting votes on a Chapter 11 plan through Oct. 10 and Dec. 10, 2020, respectively.

“Given the debtors’ efforts to pursue a value-maximizing outcome on a dual-track path, the debtors believe that a 120-day extension of their exclusive right to file a plan of reorganization and their exclusive right to solicit acceptances thereof, will be necessary in order to allow the debtors sufficient time to run their sale process and simultaneously try to advance plan negotiations,” the extension motion said.

A hearing on approval of the bid procedures is scheduled for May 7, and the exclusivity extension hearing will be held on May 19.

McClatchy is a news and information provider based in Sacramento, Calif. The company filed bankruptcy on Feb. 13 under Chapter 11 case number 20-10418.

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