The McClatchy Company (NYSE: MNI) announced today that it has extended the closing date of its agreement to sell 10 acres of land adjacent to The Miami Herald in order to allow the buyer additional time to arrange financing in this difficult credit environment.
The purchase price remains unchanged at
$190 million-- $10 millionof which McClatchy has already received in the form of a nonrefundable deposit.
With the acquisition of Knight-Ridder, Inc. in 2006, McClatchy inherited an agreement to sell The Miami Herald's 10-acre parking lot with no expiration date on the deal. The contract had subsequently been amended to require closing by
Dec. 31, 2008.
Under the terms of the new amendment, the buyer, Citisquare Group, LLC, has agreed to close the transaction on or before
June 30, 2009, and will relinquish its right of first refusal to purchase The Miami Herald's building and underlying land, which was included in the original agreement. Citisquare has the ability to extend the agreement for an additional six months to Dec. 31, 2009, by increasing the termination fee payable to McClatchy should the deal fail to close. Gary Pruitt, McClatchy's chairman and CEO, said, "We are pleased to reach an accommodation with Citisquare to preserve this valuable transaction. Maefield Development, a Citisquare partner and the developer of this land, has expressed confidence to us that the deal will close."
Not getting the deal done now is bad news. Of course the worst news would be if the deal fell apart. But what will the financial health of the buyer be in 6 months? And I'm betting McClatchy needed the cash from the deal pretty badly, even though they claimed they would use the proceeds to pay down debt.