The proper thing to do, when a company cannot make debt payments, is to file for bankruptcy. Then within the BK court system the secured debt owners would become the new owners of the reorganized company. (See Minn Star news)
The McClatchy family, with their super voting stock, is trying desperately to avoid this because they know they will be ousted in bankruptcy and receive $0 in the reorganization.
Bankruptcy does not destroy a company. In many cases is actually fixes what is wrong and allows a healthy company to emerge with a fresh start.
The only question is whether McClatchy is really a healthy company without the debt. That is doubtful.
I think that bankruptcy would be the best option because then they could reduce debt, get rid of unneeded leases from empty office space, renegotiate contracts, etc.
The reader has it right. Look at the latest news on the bankruptcy proceedings of the Minneapolis Star-Tribune -- the Star-Trib's debt-holders will become the new owners and will choose new management under a reorganization plan. The existing owners will find their stock wiped out.
None of this is to suggest what the McClatchy family is doing is illegal. The exchange offer is completely legal; the question is whether it is in the best interests of the company.
The current ownership of McClatchy is dysfunctional and clueless. Avoiding bankruptcy will simply allow the current inept management to continue running the company into the ground. The best thing for the company would be for them to be ousted to allow new management to take over the company.