McClatchy Co. has reached a standstill agreement with the Pension Benefit Guaranty Corp. (PBGC) to extend negotiations with its creditors.
The month-long standstill agreement was effective January 14. In a filing with the Securities and Exchange Commission, McClatchy said it had a minimum funding contribution due January 15 in excess of $1 million.
McClatchy, publisher of The Miami Herald and other newspapers, entered into non-disclosure agreements with lenders holding approximately 87% of first lien notes and 100% of other liens.
“These conversations are ongoing and productive, and the standstill agreement will allow McClatchy, as well as its lenders, the PBGC, and their respective legal and financial advisers, time to continue their negotiations,” the company said in a statement.
The company said it was “working towards a permanent solution under which the PBGC would assume McClatchy’s qualified pension plan and continue to pay the company’s pension plan participants their benefits.”
McClatchy has said it was unable to make $124 million in contributions due over the course of 2020, and it would stop making supplemental payments to some former executives.
Under the terms of the standstill agreement, the PBGC agreed to forbearance period until February 18, 2020. McClatchy said it would take the option to defer paying interest on its secured debt for its contractual 30-day grace period.
In November, the company said it was in talks with key stakeholders and the PBGC, including discussions of a possible distress termination of the plan.
The company’s debt woes stem in large part from its acquisition of the newspaper chain Knight Ridder in 2006. Most of the executives it is not paying supplemental benefits to are from Knight Ridder.
McClatchy, whose 30 newspapers include The Sacramento Bee, The Kansas City Star, and the Charlotte Observer, said it has a current workforce of 2,800 employees.
In the third quarter, McClatchy reported a loss of $304.7 million, compared with net income of $7.04 million in the third quarter of the previous year. McClatchy’s revenue declined 12.4% to $167.4 million.
The company said its debt at the end of the third quarter was $708.5 million, and the company finished the quarter with $11.4 million in cash.
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