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McClatchy to Declare Bankruptcy?

Discussion in 'Journalism topics only' started by LanceyHoward, Nov 14, 2019.

  1. LanceyHoward

    LanceyHoward Well-Known Member

    According to Rick Edmonds of Poynter it seems likely.

    McClatchy's financial distress has the company exploring options — including a sale - Poynter

    The company needs to make a payment to the pension plan of 120 million next spring. They do not have the cash so in the absence of an extension being granted or additional financing being acquired they will be unable to make the payment.

    According to Edmunds, a hedge fund, Chatham Asset Management, controls the debt and the equity so they would take over the company if they maintain their interests.
  2. Azrael

    Azrael Well-Known Member

    Oh man.
  3. wicked

    wicked Well-Known Member

    Are there enough sellable assets left that Chatham would want to take it on? Could they just walk away?

    Hard to imagine that this chain was hands down the best in the country only a dozen years ago.
  4. SportsGuyBCK

    SportsGuyBCK Active Member

    Of course, the CEO will keep getting his $35K per month housing allowance ... :mad:
    Severian and Fredrick like this.
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

    The reason Chatham owns all of that McClatchy debt (I can't speak to the equity they bought up) is complicated. ... but a year and a half ago, McClatchy was on the ropes, and speculators had piled up about half a billion dollars of short bets on credit default swaps. A CDS is a type of insurance against default. Those speculators were betting on a default. Chatham was the one who was selling a lot those swaps (kind of like selling insurance policies).

    What happened next was really sleazy, and I have no idea how it is even legal. Chatham turned around after selling all of those swaps, which it actually stood to lose on if McClatchy defaulted, and struck a deal with McClatchy to refinance its bonds. It trimmed a lot of interest off and extended how long the company had to pay it back. The catch was that Chatham made it so that they orphaned the CDS contracts. ... by shifting the debt into a new holding company. It basically left all of those shorts holding a bet on default. ... against an empty company that no longer had any debt (because the debt had been shifted somewhere else). For Chatham it meant collecting premium on the swaps it had sold; free money. ... against an empty company that no longer had any debt. It was total manipulation.

    At the same time as all of that Chatham was buying up a ton of McClatchy stock, so they likely thought the business was a good investment opportunity (probably why they were selling the swaps, too), as well, and probably felt good lending all of that money in the refinancing, on that basis too. But the sleaziness of the CDS scheme to work both sides of the trade for a guaranteed profit really raised a lot of eyebrows.
  6. BTExpress

    BTExpress Well-Known Member

    They are getting rid of 24 FTEs and five part-timers at their Publishing Center (which handles print).
  7. Sam Mills 51

    Sam Mills 51 Well-Known Member

    The bloodletting there will never stop.
  8. Readallover

    Readallover Active Member

    Crain’s Chicago just reported McClatchy and Tribune are moving forward on merging.
  9. The Big Ragu

    The Big Ragu Moderator Staff Member

    They are merging, or are they back in talks?
  10. Sam Mills 51

    Sam Mills 51 Well-Known Member

    No different than an outgoing VP who received a two-installment payment of $750K after a round of layoffs not too long ago.
  11. Fredrick

    Fredrick Well-Known Member

    What is an FTE? Do you think this chain will follow Gannett/Gatehouse and need to make cuts of human beings, i.e. newsroom people? Somebody explain what this all means. I thought this was one of the "better" companies. Is it in dire straights or ???
  12. Paul_Bowker

    Paul_Bowker New Member

    FTE: Full Time Employee.
    Fredrick likes this.
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