Sunday, June 21, 2009

Reader: McClatchy family is bullying debt-holders to accept pennies on the dollar so the family can hang on to the company

An astute reader explains why the McClatchy family is coercing debt holders to accept pennies on the dollar in the latest debt exchange offer -- they know if the company goes into bankruptcy, the debtors, not the family, would become owners of the company.

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.


Anonymous said...

“Mildred, don’t you think the deck chairs look great over here?”

“Ms Dawson, you are the quite the decorator. White Star Lines would be proud to have you in their employ”

“Do you think the ship will sink Mildred?”

“Well, all I know is my heirs will be well taken care of, as we have hundreds of thousand of shares of White Start Line stock. “And you Ms. Dawson?”

“Oh not to worry, we are a major shareholder in, oh I forget, but it’s the top Buggy Whip company in the United States.”

Sigh “I think we’re going to make it Ms. Dawson. Have some more of this Titanic Tea, won't you.”

Anonymous said...

So in a microcosm, McClatchy management, just like the DNC, continue to empower horrific socialist management’s running the paper (country) into the ground, because at least you have control?

I get it. I’m convinced. You win McClatchy. Mark me down as a liberal too!

Anonymous said...

The major stockholders and executives who put this whole consortium together were after three things power, influence and money. Those are three things that no one likes to let go of once they have them. They will only give up when the creditors force them to. They will continue to look for the "magic" pill until someone tells them to take their ball and go home.

McClatchy Watch said...

7:08 heh

John Altevogt said...

From what I've read on here from the people who work in other McClatchy shops, and from what I know of The Star and The Eagle you can't get any worse management. Time to start with the firing at the top and work their way down. That way the producers will still be there, but all the hippy dippy 60's losers will be gone.

If the WWII generation was the greatest generation, my generation, the boomers were the biggest pack of losers to ever inflict themselves on it. The sooner we're gone maybe they can turn the mess we made around.

Anonymous said...

The family is a bunch of rich losers who inherited everything. They're clueless about running a modern communication company and it's evident!

Anonymous said...

There is a rumor that some years ago, CEO Purdy secretly forced the Board Of Directors to enter a lobotomy clinic in the UK. The doctors examined each one for a brain with no results. After more intense testing, the doctors confer on the proper no-brain lobotomy procedure.

First doctor, “I say old chap, how do we operate on patients without even one brain lobe?”

Second doctor, “Let’s just say the lobotomies were successful, who could argue with that?

First doctor, “What shall we tell the Purdy one?”

Second doctor, “ Nothing, he was my first patient.”

Anonymous said...

The management did overpay for the knight ridder aquisition. That is a fact.

But please tell me:
1. Where are other managers of newspapers doing a better job?

2. You will really tell me that the McClatchy familiy are evil and the debt holders are the good guys. That is just laughable.

Anonymous said...

2. You will really tell me that the McClatchy familiy are evil and the debt holders are the good guys. That is just laughable.


What is laughable is that you consider deadbeats that borrow money without the ability to repay it are somehow competent to continue running the business that they drove into ruin by doing so.

Of course being an idiot leftist, not paying your bills is a badge of honor.

Anonymous said...

10:12, you didn't answer either question.

John Altevogt said...

You didn't ask two questions. You asked one question (which really isn't relevant) and made a statement. And who cares? I didn't know posting here obligated anyone to participating in pop quizzes issued by our local trolls.

Anonymous said...


With your argumentation there would be no debt at all in the business world, since according to you only a management that has the money on hand to pay the debt back immediately at the date they issue it is a good management. Right.

Ever thought of the reason for taken on a debt load? Try this: you issue debt tob buy a business because you plan to pay it off with increased cash flows from the combined business. If then the whole industry goes belly up then you can not really blame the management for the debt load. 2006 and even way into 2008 NOBODY would have expected such a brutal downturn.

Another question: do you agree that even while Mr. Pruitt overpaid for the aquisition he tries everything to reduce costs and switch the business to a more online focused model? As far as I know McClatchy so far has done a better job in generating online revenues than many of its peers.

Anonymous said...


Good to see that there is always a smart guy with useful comments.
By the way, just because you are not able to answer a question, it meens it is not relevant.

Anonymous said...

MW uncovers that the McClatchy family has been calling all of the shots to do everying possible to hang on to the company the family founded. Wow imagine that. Great job of investigative reporting.