McClatchy Co. expects to transfer its defined benefit plan to the Pension Benefit Guaranty Corp. as part of a court-supervised sale, the Sacramento, Calif.-based company said Sunday.
McClatchy announced that Chatham Asset Management was deemed the successful bidder in the Chapter 11 bankruptcy sale, which is subject to court approval later in July.
The company said in the announcement it expects to emerge from Chapter 11 in the third quarter of 2020, "as it entered it: in its totality, as one company serving 30 communities across America through its iconic local news titles, from the Miami Herald and The Charlotte Observer to The (Raleigh) News & Observer, The Kansas City Star, Fort Worth Star-Telegram and The Sacramento Bee."
The agreement calls for the PBGC to assume The McClatchy Co. Retirement Plan, and for McClatchy to transfer an estimated $1.4 billion in pension assets to the PBGC.
McClatchy President and CEO Craig Forman said in the statement that from the beginning of the voluntary Chapter 11 filing, "our aim was to permanently address both the company's legacy debt and pension obligations and strengthen our balance sheet in order to provide greater certainty and stability to the wider group of our colleagues and stakeholders who benefit from a restructured McClatchy."
In November, McClatchy disclosed discussions with the PBGC to take over its qualified defined benefit plan. That plan, which was closed to new participants in 2009, has $1.3 billion in assets and more than 24,000 participants. As of March 31, 2019, it was underfunded by $535 million.
When the company announced the Chapter 11 filing in February, it estimated pension assets of $1.39 billion, including $580 million in voluntary contributions.