SACRAMENTO, Calif., Sept. 20, 2017 /PRNewswire/ -- McClatchy (NYSE American: MNI) ("McClatchy" or "the company") previously announced on September 7, 2017, that it had completed the sale of The Kansas City Star's office building and land and The Sacramento Bee building and surrounding land ("the property sales"). Together, the property sales resulted in gross proceeds of $56.75 million and approximately $44.8 million of after-tax proceeds to the company. McClatchy expects to reinvest $4.8 million of the after-tax proceeds into the business, and is offering the remaining $40 million to holders of its 9.0% Senior Secured Notes due in 2022 (the "9.0% Notes") in compliance with the indenture for the 9.0% Notes pursuant to the Offer described below.
McClatchy noted when it announced the property sales that the indenture for its 9.0% Notes requires it to make a cash offer at par using the after-tax proceeds from the sale to the extent that the proceeds are not reinvested within 365 days of the closing of the transaction. Accordingly, McClatchy has today commenced an offer to purchase for cash up to $40 million of the outstanding 9.0% Notes at par plus accrued and unpaid interest to the settlement date. The terms and conditions of the offer are set forth in the Offer to Purchase dated September 20, 2017 (the "Offer" or "Offer to Purchase") and Letter of Transmittal (the "Letter of Transmittal"). The Offer is not subject to the receipt of any minimum amount of 9.0% Notes tendered, but is subject to the general conditions set forth in the Offer to Purchase. The Offer is scheduled to expire on October 19, 2017.
On September 11, 2017, the company in a separate transaction repurchased $35.0 million in principal amount of its 9.0% Notes for a total of $36.3 million, (including accrued and unpaid interest) in a privately negotiated transaction not related to this Offer (the "Repurchase"). The Repurchase satisfied the company's obligation under the indenture for its unsecured publicly traded bonds to repurchase approximately $32.0 million in publically traded bonds within 90 days of entering into the lease on the Sacramento building and land. Since August 31, 2017, McClatchy has reduced its debt by more than $53 million to approximately $805 million. The company's cash position is approximately $90 million as of the date of this press release, bringing net debt to an estimated $715 million.
Based on recent market quotations for the 9.0% Notes, the 9.0% Notes were trading at premium prices ranging between 103 percent and 104.50 percent of par. However, holders of the 9.0% Notes should check with dealers of the 9.0% Notes to obtain current pricing on the 9.0% Notes.
To the extent the 9.0% Notes are not repurchased under the Offer, management may use the proceeds to invest in initiatives and/or investments to continue its digital transformation, to selectively repurchase outstanding Notes or for other corporate purposes as determined by management and the Board of Directors.
This press release is neither an offer to purchase, nor a solicitation for acceptance of the Offer. The McClatchy Company is making the Offer only by, and pursuant to the terms of, the Offer to Purchase and the related Letter of Transmittal.
The complete terms and conditions of the Offer are set forth in the Offer to Purchase and Letter of Transmittal that are being sent to holders of the Notes. Holders are urged to read the tender offer documents carefully when they become available. Copies of the Offer to Purchase and Letter of Transmittal may be obtained from the Tender and Paying Agent for the Offer, Bank of New York Mellon Trust Company, N.A., at 1-800-254-2826 (US toll-free).
McClatchy is publisher of iconic brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. McClatchy operates 30 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 American under the symbol MNI.
Statements in this press release regarding future financial and operating results, including our strategies for success and their effects, our real estate monetization efforts and the repurchase of outstanding notes, the future of CB, 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 reducing debt whether through tenders offers, open market repurchase programs or other negotiated transactions; including sales of real estate properties 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 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. 25, 2016, 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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Elaine Lintecum, Vice President of Finance and Chief Financial Officer, firstname.lastname@example.org