McClatchy files for bankruptcy

McClatchy Co.—publisher of the Charlotte Observer and the Raleigh News & Observerhas filed for bankruptcy:

The Chapter 11 filing will allow McClatchy to restructure its debts and, it hopes, shed much of its pension obligations. Under a plan outlined in its filing to a federal bankruptcy court, about 60 percent of its debt would be eliminated as the news organization tries to reposition for a digital future.

The likely new owners, if the court accepts the plan, would be led by hedge fund Chatham Asset Management LLC. They would operate McClatchy as a privately held company. More than 7 million shares of both publicly available and protected family-owned stock would be canceled.

This comes on the heels of news last month that Warren Buffet’s BH Media Group—publisher of the Greensboro News & Record and the Winston-Salem Journal— would sell its newspaper properties to Lee Enterprises Inc., which is based in Davenport IA. The Journal’s Richard Craver reports:

An unexpected financial wrinkle emerged about seven hours after the Berkshire Hathaway-Lee announcement when an affiliate of a hedge-fund group made public it had acquired a 5.9% stake in Lee.

Alden Global Capital’s MNG Enterprises bought 3.4 million shares of Lee at $2.7173 a share for an overall investment of $9.24 million.

The 5.9% stake makes Alden the third-largest shareholder in Lee. Cannell Capital held a 7.9% stake at 4.57 million shares and Franklin Mutual Advisors LLC a 7.5% stake at 4.36 million shares, according to Lee’s 2020 proxy filing on Jan. 13.

Alden said in its regulatory filing that it “intends to engage in discussions” with Lee management and its board of directors “about certain operational and strategic matters, including, but not limited to, the recently announced acquisition of Berkshire Hathaway’s newspaper operations and matters pertaining to (Lee’s) 2020 annual meeting.”

If Alden’s previous pattern of ownership is any indication, it is likely to request representatives on the Lee board.

The media landscape to continues to change–understatement of the day.

Sam Hieb / Contributing Editor

Sam Hieb is freelance journalist from Greensboro, North Carolina. He is a contributing editor for Carolina Journal and for Piedmont Publius, a blog that focuses on political a...

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