Hedge fund Chatham Asset Management says it will pay $312 million to buy newspaper publisher McClatchy – publisher of The News & Observer and Herald Sun in the Triangle – out of bankruptcy protection.
Interestingly, McClatchy bought The N&O in 1995 for $373 million, according to a report at the time from The Associated Press.
That deal brought to a close some 100 years of ownership of the newspaper by the Daniels family. At the time the N&O was among the emerging leaders in utilization of the internet.
“You want to be in a position that if you decide you want to sell something, you can sell it on your terms,″ Frank Daniels Jr., president and publisher of The News and Observer Publishing Co., said when the deals was announced.
The Charlotte Observer also is part of the McClatchy chain.
Chatham said Friday that it plans to offer employees at the 30-newspaper chain their current jobs with the same pay and benefits, and it will honor collective bargaining agreements.
Chairman Kevin McClatchy, CEO Craig Forman and their fellow board directors will step down when the deal closes by Sept. 30, the chain said in a statement. The deal would need the approval of a U.S. Bankruptcy Court judge, and a hearing is scheduled for Aug. 4.
“While it will be humbling to pass the torch, we want to thank our employees, readers, communities and Chatham for recognizing the value of the public-service role of local journalism and supporting its mission,” Kevin McClatchy said in a statement as reported by the Charlotte Observer.
McClatchy Co., which is headquartered in Sacramento, California, is one of the largest newspaper companies in the U.S. It also owns the Miami Herald and the Sacramento Bee. It filed for bankruptcy protection because of a heavy debt load stemming from its $4.5 billion purchase of the Knight-Ridder newspaper chain in 2006, just as the newspaper industry went into steep decline.
Chatham was McClatchy’s largest shareholder and debt holder. It beat out a bid from Alden Global Capital, another hedge fund that has taken a leading role in the U.S. newspaper business.
The Alden bid “proposed to cut around 1,000 jobs — more than a third of the 2,800 employees listed in the company’s first-day bankruptcy filing — and was valued at about $100 million less than Chatham’s, according to a court filing later Friday by McClatchy’s restructuring adviser,” The Observer said.