Home > News > Risk > Newspaper Company McClatchy Halts Retirement Payouts After Chapter 11 Filing
Risk

Newspaper Company McClatchy Halts Retirement Payouts After Chapter 11 Filing

Company negotiating with PBGC to take over benefit payments amid a new company-wide restructuring plan.
By Steffan Navedo-Perez

McClatchy Co., the nation’s second-largest local newspaper company, has filed for Chapter 11 bankruptcy in the face of “secular industry headwinds that have battered newspaper advertising revenues.” The company has launched negotiations with the Pension Benefit Guaranty Corporation (PBGC) and its largest secured creditor to fulfill the needs of its pension obligations and capital structure.

“[McClatchy] will seek the bankruptcy court’s authority to terminate its qualified pension plan, and appoint PBGC as the plan’s trustee,” the company said in a statement. “PBGC would continue to pay the company’s qualified pension plan participants their benefits.”

Beneficiaries under McClatchy’s current pension plan need not worry, the company asserted in its statement, as the PBGC will receive assistance from the company in the form of $3.3 million annually for a decade and 3% equity ownership of the company.

The PBGC rebuked, asking for “materially” larger fixed sums of income from the company over the course of the agreed-upon time period, as well as vying for more equity from the company.

For more stories like this, sign up for the CIO Alert newsletter.

Under the restructuring agreement, the company’s existing second and third lien term loans will be extinguished in exchange for 97% of the equity ownership of the company, according to the company’s press release.

“McClatchy’s plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders,” said Craig Forman, McClatchy’s president and CEO. “We expect there will be no adverse impact on qualified pension benefits for substantially all of the plan’s participants and beneficiaries.”

The company’s stock peaked in April 2014 at a $48.63 valuation. As of press time, the stock is valued at $0.35 per share. “The company’s existing equity will be cancelled,” the company said. McClatchy expects total revenues in the fourth quarter to be $183.9 million, down 14.0% from the fourth quarter of 2018.

Sears reached a similar agreement with the PBGC last year.

Media representatives from McClatchy did not respond to calls by press time.

Related Stories:

PBGC, Sears Reach Chapter 11 Bankruptcy Settlement

Trump Wants $26 Billion Premium Hike for PBGC Multiemployer Plan

PBGC Approves Facilitated Merger of New York Pension Funds

Tags: , , , , , ,

Home > News > Newsmakers > New Mexico Pension Reform Breezes Through State Senate
Newsmakers

New Mexico Pension Reform Breezes Through State Senate

Bill proposes $76 million infusion from state, as well as sweeping contribution and COLA changes.
By Steffan Navedo-Perez

Legislation proposing a sweeping overhaul of the New Mexico Public Employees Retirement Association (PERA) to construct a clear path to transparency breezed through the state senate with healthy bipartisan support.

The bill would create a $76 million infusion from the state this year and increase the pension’s annual cost-of-living adjustments (COLAs) to 2.5% from 2% for roughly one-third of beneficiaries. It would also align COLAs for the remaining participants through a model that correlates their benefit payments with the pension plan’s investment performance. Those COLAs would have a 3% ceiling established.

Contributions from active workers and public employers would increase in increments so that there is proof of “burden sharing,” Gov. Michelle Lujan Grisham said in a statement. Those contributions would be mitigated and eventually decreased as the funded ratio for the pension plan improves.

“We must make changes now—the alternative is to saddle New Mexicans with unacceptable risk,” Grisham said.

For more stories like this, sign up for the CIO Alert newsletter.

The $16 billion PERA oversees the benefits of more than 90,000 New Mexicans, and began running into financial tumult in the late 1990s when contributions to the fund were lower than the benefits being paid.

The fund is approximately 70% funded. Ultimately, the legislation being pushed is an attempt to clear the state’s $6.6 billion unfunded liability within 25 years and make it solvent.

Additionally, the plan intends to incentivize employees to remain in the labor force and retire at an older age by eliminating the current earnings cap of 90%. Grisham formed a task force last year to evaluate the issue and identify potential solutions to enter into the reform legislation.

New Mexico PERA Chief Investment Officer Dominic Garcia told CIO, “This is a great thing. I appreciate being part of the task force and I think it will come up with a good solution.”

“We must be proactive,” Grisham said in a statement. “A kick-the-can-down-the-road approach when we have a multi-billion-dollar unfunded liability hanging over employees’ and retirees’ heads is unacceptable. Left unattended, that shortfall will, sooner than later, obligate painful cuts and wreak havoc on future generations of retirees —if we do not come together and act now.”

Wayne Propst, executive director of PERA, said he believes the next economic downturn could leave the state with no feasible avenue to pay down its unfunded liabilities if integral changes to the system are not completed beforehand.

Related Stories:

New Mexico Governor Backs Linking Pension COLAs to Investment Performance

New Mexico Investment Council Rethinks Private Equity, Creates Emerging Manager Program

Exclusive: New Mexico ERB CIO Jacksha Is Worried About the Trade War

 

 

Tags: , , , , , ,

«