Obtains Interim Approval to Access DIP Financing
McClatchy and Local Newsrooms to Operate as Usual throughout Chapter 11 Process
McClatchy announced today that the U.S. Bankruptcy Court for the Southern District of New York has granted the Company approval for its first day motions related to its voluntary Chapter 11 petitions filed on February 13, 2020.
The Court granted McClatchy interim approval of the $50 million debtor-in-possession financing from Encina Business Credit, including immediate access to $12.5 million, which, alongside the Company's normal operating cash flows, allows McClatchy sufficient liquidity to fulfill commitments to stakeholders and operate as usual throughout the restructuring process. Among other approvals, the Court has authorized McClatchy to continue paying ordinary course employee wages and providing benefits – including health insurance, paid time off, and 401(k) programs – without interruption; honor obligations to advertisers, distribution partners, and customers and continue to operate customer programs in the ordinary course of business; reimburse business expenses as well as maintain the use of corporate credit cards consistent with typical Company policy; and make payments to go-forward vendors in full under normal terms for goods and services provided on or after February 13, 2020.
Craig Forman, President and Chief Executive Officer, stated of the milestone, "The Court's approval of our first day motions is a key step in our Chapter 11 case that enables us to continue supporting our employees, vendors, advertisers, and the 30 communities we serve as we pursue a permanent resolution to legacy debt and pension obligations. These approvals ensure that, throughout this process and beyond, McClatchy can continue to focus on our unwavering commitment to strong, independent local journalism that is essential to the communities we serve. We are operating as usual and taking the next step toward a stronger future for McClatchy."
The Company is hopeful that it will soon begin mediation with its lenders and the Pension Benefit Guaranty Corporation so the parties can reach a resolution and provide greater certainty to McClatchy's stakeholders.
McClatchy is advised in this process by Skadden, Arps, Slate, Meagher & Flom, LLP, Groom Law Group, Chartered, and Togut, Segal and Segal as legal advisors and Evercore Group L.L.C. and FTI Consulting, Inc. as financial advisors.
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