New Jersey-based hedge fund Chatham Asset Management has managed to acquire one of the country's largest news publishers, the McClatchy Company, by becoming the winning bidder at its bankruptcy auction. McClatchy made the announcement on Sunday, stating that it expects to be acquired by Chatham as soon as the transaction is completed.
The acquisition will officially end the 163 years of family ownership of the newspaper publisher, underscoring the continued transition in the country's newspaper industry. McClatchy, which owns iconic newspapers such as The Miami Herald, The Sacramento Bee, and the Kansas City Star, filed for bankruptcy protection in February.
The publisher's financial troubles can be traced back to its $4.5 billion acquisition of Knight Ridder, the country's second-largest newspaper chain, in 2006. The company also agreed to assume the company's $2 billion debt. The Great Recession in 2008 further placed pressure on the company's finances, one that it has been having trouble recovering from ever since.
Prior to its bankruptcy filing, Chatham was already a major investor in the publisher and one of its largest creditors. According to McClatchy, Chatham was officially announced the winner of the auction by the U.S. Bankruptcy Court headed by Judge Michael E. Wiles.
Under the deal, Chatham will be taking the publicly traded McClatchy private after it becomes the majority owner of the company by the third quarter of this year. The sale of the company will still need to be approved by the court and regulators with a hearing scheduled to take place on July 24.
Chatham is reportedly planning to keep all of the company's 30 newspapers intact. McClatchy's chief executive officer, Craig Forman, stated that by being acquired by Chatham, the company can continue to operate and quality news coverage to all of its readers around the country. He added that he was pleased with the outcome and of Chatham's support and belief in its mission to serve its customers.
Neither company immediately disclosed the amount involved in the deal. However, Chatham did make a bid to acquire the company back in April for $300 million, incluyding debt that would be assumed by Chatham and its partners.
Chatham has various investments in other publishers, including Canadian publisher Postmedia, which owns newspapers such as The National Post, The Ottawa Citizen, and The Montreal Gazette. Chatham also owns a stake in American Media Inc, which is the parent company of The National Enquirer.