MNI stock is the biggest gainer on Thursday and jumped 388% after McClatchy Co (NYSE:MNI) announced the signing of a Standstill Agreement with the Pension Benefit Guaranty Corporation (PBGC). The company had skipped a $12 million debt-interest payment that was due on Wednesday, and it continues to engage creditors to avoid bankruptcy court proceedings.
McClatchy Restructuring Negotiations with Lenders
In November last year, the company announced that it will be restructuring its negotiations with its secured lenders as well as bondholders in a bid to address the future of its capital structure and pension obligations. The negotiation involves deleveraging transactions that include its Second Lien Term Loans, as well as Third Lien Notes secured by second and third liens on almost all McClatchy’s assets.
In support of the engagement, the company said it has entered a non-disclosure agreement with lenders holding about 87% of its First Lien Notes and 100% of the Second Lien Term Loans and Third Lien Notes. The ongoing engagement has been productive, and the agreement will allow the company, PBGC, and lenders to continue the discussions.
The company publishes 30 newspapers, including Kansas City Star, Miami Herald, Charlotte Observer, and Sacramento Bee. It now has 30 days to complete a deal in which the debt will be converted for equity in the company.
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MNI stock is up 388% at $2.14 on hefty volume.
Retirees Not Affected by the New Agreement
Regarding the missed pension payment, the company said that the PBGC had agreed to wait up to February 18 before taking action as engagements continue regarding a government takeover of the pension fund. However, the agreement is unlikely to affect the payment to retirees that are already collecting their pensions.
McClatchy CEO and President Craig Forman indicated that the PBGC and lenders were collaborating and engaging in good faith to come up with an agreement. This, therefore, underpins the company’s constant commitment to the dissemination of independent journalism.
The problems of the publisher come at a tricky time for the newspaper sector. Recently, Gannet Co Inc. (NYSE:GCI) merged with GateHouse Media, which means it faces intense competition after its proposed merger with Tribune Publishing Co (NASDAQ:TPCO) fell apart in 2018.
MNI stock is still down about 70% over the past year.
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