Wednesday, May 27, 2009

McClatchy Family Trustees maneuvering their stock positions?

A reader says the McClatchy family is making some moves.
"... the word I got today is that there is some shuffling of the Family Trustees and the class B shares that they hold to control the company.

It turns out that they are allowed to exchange these shares on a one for one basis at their discretion.

The latest attempt to coerce bondholders into folding for 20 cents on the dollar came with a catch that prevents the company from most other maneuvers to draw value from the company such as dividends going forward.

Since they can no longer draw value from Class B shares beyond what they need to control the company, they can now convert them to Class A shares, thus driving the price up."

If you have more info, leave it in comments.


Anonymous said...

Interesting read if you can filter through the legalize of one of the most convoluted SEC filings ever posted and THEN comprehend the possibilities.

"On May 20, 2009, Theodore R. Mitchell was named one of four co-trustees of four separate trusts established for the benefit of McClatchy family members. Each of the four trusts holds 3,125,000 shares of Class B Common Stock. Subject to the terms of the Stockholders' Agreement dated as of September 17, 1987, described in Item 6 below, each holder of Class B Common Stock has the right to convert Class B Common Stock into Class A Common Stock on a one-for-one basis."

Anonymous said...

Converting from Class B shares to Class A shares does not drive the price up.

It is just a conversion. More A shares are created when the B shares are released.

So this is not the reason for the recent price increase.

Anonymous said...

The McClatchy Co., publisher of newspapers like The Miami Herald, The Sacramento Bee and The News & Observer in Raleigh, N.C., announced last week that it had changed some of the terms of its debt agreements in the hope of staying alive for the foreseeable future.

The amendments to McClatchy's $1.15 billion existing debt will allow the company to exchange the current debt for cash and new debt. The company's total debt will also be reduced and McClatchy will have longer to repay it, but it will have to paid back at a higher interest rate.

The news comes a couple months after McClatchy, the country's third largest newspaper company, announced that it would cut 15 percent of its workforce in March. And that was after the company had laid off 1,400 employees last June.

In an effort to put a happy face on the beleaguered company's recent announcement, McClatchy CFO Pat Talamantes called the latest move "a positive development."

"In addition to the outstanding efforts made by our papers to weather this downturn, we believe that being able to have more flexibility in the use of our revolving credit facility will allow us to put the company in a stronger financial position to manage our capital structure through this downturn," Talamantes said.

It seems that McClatchy has done everything it can to remain afloat and keep its 30 daily papers alive. We certainly hope that it works.

Anonymous said...

Converting from Class B shares to Class A shares does not drive the price up.

Yes actually it does when done in concert with a perceived capital raising event.

Recent examples such as BOA and Fifth Third demonstrate this effect quite adequately, despite the fact that MNI's move is a bait and switch designed not to raise capital but to buy time.

You also have to remember that it takes only a small amount of money to raise MNI substantially so for a few hundred thousand, they can pump their deal and attempt to portray it as a positive while hawking the stock to would be buyers.

What is really interesting is that a certain director was selling shares going into this deal. That tells you everything you need to know right there.