SACRAMENTO, Calif.,
Jan. 11, 2017 /PRNewswire/
-- McClatchy (NYSE: MNI) ("McClatchy" or "the
company") announced that it has entered into separate
agreements to sell and lease back real property owned by The
Sacramento Bee in Sacramento,
California and The State Media Company in Columbia, South Carolina for total gross
proceeds of $67.8 million.
The Sacramento Bee entered into a transaction with
Shopoff Advisors, L.P. ("Shopoff"), to sell its real property which
includes The Sacramento Bee building and surrounding land
and buildings. Simultaneously with the closing of the sale,
McClatchy will enter into a 15-year lease with Shopoff to leaseback
the real property with initial annual lease payments of
approximately $4.6 million.
This transaction excludes a parking garage formerly owned by
The Sacramento Bee, which was sold for $5.75 million in a transaction that closed in
December 2016.
In a separate but similar transaction, The State Media Company
contracted with a subsidiary of Twenty Lake Holdings, ("Twenty
Lake") to sell its real property including The State
building and surrounding land. McClatchy will enter into a 15-year
lease with Twenty Lake with initial annual lease payments of
approximately $1.6
million.
These transactions are subject to customary closing conditions
and are expected to close in the second quarter of 2017.
Elaine Lintecum, McClatchy's
chief financial officer said, "We are pleased that in less than one
year of marketing these properties, we were able to collaborate
with two strong investors like Shopoff and Twenty Lake to sell the
properties at or near our asking prices and lease them back for our
operations.
"These sale-leaseback transactions are one more step in moving
forward with our real estate monetization efforts to redeploy our
capital for better uses for the benefit of our shareholders and
bondholders. We generally expect to reduce debt with the proceeds
of these transactions."
A repurchase clause included in both of the lease agreements to
be entered into at the closing of the transactions will offer an
option for the company to repurchase the real property at the end
of the 15-year lease term. As a result, the leases are expected to
be accounted for under GAAP as financing leases. Lease
payments will reduce the related lease obligation on the balance
sheet and include interest expense associated with the
obligation.
Upon closing of the transactions, the company is required to
first offer the after-tax proceeds from the sales at par to the
secured bondholders in accordance with the indenture for its
secured 9.0% bonds maturing in 2022. Under the indenture for its
unsecured bonds, the company has 90 calendar days to reduce debt
equal to approximately $48.0 million
(subject to change based on market rates at the closing of the
transactions), which reflects the attributable debt associated with
the leases. Should the secured bondholders choose not to
participate in the par offer, the company may alternatively seek to
reduce some of its unsecured bonds with the after-tax proceeds in
order to meet its 90-calendar-day requirement for debt
reduction.
In connection with these sale and leaseback transactions, and
certain similar transactions under consideration, McClatchy
executed a fourth amendment to its credit agreement. The fourth
amendment allows the after-tax proceeds from these sales and
leaseback transactions that are not claimed by secured bondholders
prior to expiration of a par offer to be used to repurchase any of
its unsecured bonds in the open market to meet the debt reduction
requirements noted above. The company could also decide to hold
cash in excess of required debt reduction amounts on its balance
sheet or use the cash for other corporate purposes.
Lintecum added, "Our goal remains to strengthen the company's
financial position, which means doing what makes the most economic
sense for the company as it pertains to repurchasing debt in the
open market. While we would prefer to reduce secured debt, we must
adhere to our 90-day debt reduction requirement and are unwilling
to pay uneconomic prices in the open market for secured debt."
McClatchy noted that its 9.0% secured debt becomes callable in
whole or in part as of December 15,
2017, at a price of 104.5%.
About McClatchy
McClatchy is a 21st century news and information
leader, publisher of iconic brands such as the Miami
Herald, The Kansas City Star, The Sacramento
Bee, The Charlotte Observer, The (Raleigh) News and Observer, and
the (Fort
Worth) Star-Telegram. McClatchy operates media
companies in 29 U.S. markets in 14 states, providing each of its
communities with high-quality news and advertising services in a
wide array of digital and print formats. McClatchy is headquartered
in Sacramento, Calif., and listed
on the New York Stock Exchange under the symbol MNI.
Additional Information
Statements in this press release regarding future financial and
operating results, including our strategies for success and their
effects, our real estate monetization efforts, the future of our
investment in CareerBuilder, revenues, and management's efforts
with respect to cost reduction efforts and efficiencies, cash
expenses, revenues, adjusted EBITDA, debt levels, interest costs
and creation of shareholder value as well as future opportunities
for the company and any other statements about management's future
expectations, beliefs, goals, plans or prospects constitute
forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Any statements that
are not statements of historical fact (including statements
containing the words "believes," "plans," "anticipates," "expects,"
"estimates" and similar expressions) should also be considered to
be forward-looking statements. There are a number of important
risks and uncertainties that could cause actual results or events
to differ materially from those indicated by such forward-looking
statements, including: McClatchy may not generate cash from
operations, or otherwise, necessary to reduce debt or meet debt
covenants as expected; we may not be successful in the reducing
debt whether through tenders offers, open market repurchase
programs or other negotiated transactions; transactions, including
sales of real estate properties or transactions related to
strategic alternatives for its investments, may not close as
anticipated or result in cash distributions in the amount or timing
anticipated; McClatchy may not successfully implement audience
strategies designed to increase audience revenues and may
experience decreased audience volumes or subscriptions; McClatchy
may experience diminished revenues from retail, classified,
national and direct marketing advertising; McClatchy may not
achieve its expense reduction targets including efforts related to
legacy expense initiatives or may do harm to its operations in
attempting to achieve such targets; McClatchy's operations have
been, and will likely continue to be, adversely affected by
competition, including competition from internet publishing and
advertising platforms; increases in the cost of newsprint;
bankruptcies or financial strain of its major advertising
customers; litigation or any potential litigation; geo-political
uncertainties including the risk of war; changes in printing and
distribution costs from anticipated levels, including changes in
postal rates or agreements; changes in interest rates; changes in
pension assets and liabilities; changes in factors that impact
pension contribution requirements, including, without limitation,
the value of the company-owned real property that McClatchy has
contributed to its pension plan; increased consolidation among
major retailers in our markets or other events depressing the level
of advertising; our inability to negotiate and obtain favorable
terms under collective bargaining agreements with unions;
competitive action by other companies; an inability to fully
implement and execute its share repurchase plan; and other factors,
many of which are beyond our control; as well as the other risks
detailed from time to time in the company's publicly filed
documents, including the company's Annual Report on Form 10-K for
the year ended Dec. 27, 2015, filed
with the U.S. Securities and Exchange Commission. McClatchy
disclaims any intention and assumes no obligation to update the
forward-looking information contained in this release.
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SOURCE McClatchy