Federal government gives McClatchy a breather on pension payment

The McClatchy Co. announced it has secured a month-long standstill agreement with the federal government on a pension payment due Wednesday, giving the parent of the Miami Herald and 28 other newspapers more time to negotiate a deal.

Sacramento-based McClatchy said the agreement with the Pension Benefit Guaranty Corp. extends its “runway for negotiating a consensual restructuring with key stakeholders.”

In a document filed with the Securities and Exchange Commission, the media company said the payment due Wednesday was in excess of $1 million. McClatchy reiterated earlier statements that “substantially all” of its pension plan members won’t lose any of their payments and said Wednesday’s agreement won’t have any impact on the pensions.

The announcement came two weeks after McClatchy said it would stop paying “supplemental” pension benefits to certain former executives, most of whom used to work for the old Knight Ridder newspaper chain. Those executives represent about 2 percent of the 24,000 people covered by the McClatchy pension plans. McClatchy bought Knight Ridder in 2006.

McClatchy’s long-standing financial problems, a product of the Knight Ridder purchase and the newspaper industry’s struggles in the digital era, came to a boil in November. McClatchy announced it was beginning talks with its major debt holder, New Jersey hedge fund Chatham Asset Management, on restructuring about half of its $708 million debt.

McClatchy also said in November that it would be unable to make $124 million in contributions to the pension plan due over the course of 2020, with most of it due on Sept. 15 or after. The company is negotiating with the PBGC to take over the plan.

The forbearance agreement announced Wednesday gives the company and the pension agency more time to negotiate.

McClatchy, which operates 29 daily newspapers, has said it could be forced to file for Chapter 11 bankruptcy if it can’t get a debt deal completed with creditors, offload the pension plan to the federal government, or both. The company said its discussions on restructuring the debt have been “ongoing and productive.”

The announcement came after the stock market closed. McClatchy shares closed at 43.88 cents a share, up 1.75 cents.

This story was originally published January 15, 2020 at 7:14 PM.