Newspaper Giant McClatchy Files for Bankruptcy

Newspaper giant McClatchy Co. — which owns the Kansas City Star and 29 other newspapers in 14 states — has filed for Chapter 11 bankruptcy protection and said it expects reorganize as a privately held company with debt holders taking over the equity. The company’s total debt is over $700 million. Under terms of the chapter 11 filing, first lien debt holders holding $218 million in debt will be exchanged for new-first lien notes at a sky-high interest rate of 10 percent. Second and third lien debt holders would swap their debt for equity.

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The plan also calls for the PBGC to take over the pension plan, for the newspaper publisher of give the board 3 percent of the equity in a newly reorganized company, and to make pension contribution of $3.3 million a year to the PBGC for ten years.

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