Hedge funds duel for chain in bankruptcy court

A battle of the hedge funds is brewing in the bankruptcy auction of the McClatchy Co., one of the nation’s largest and most decorated newspaper chains.

Chatham Asset Management, a New Jersey hedge fund, seemed to have an advantage going into the planned court-supervised sale of the newspaper company, which was scheduled to start Wednesday, only to end up postponed.

Industry observers predicted that Chatham was likely to become the chain’s owner, because of a 2018 restructuring of McClatchy, the publisher of The Sacramento Bee, The Miami Herald and more than two dozen other newspapers. The refinancing of the company made Chatham — the principal owner of American Media Inc., the publisher of the National Enquirer supermarket tabloid — the largest debt holder in McClatchy.

Enter Alden Global Capital, a New York hedge fund that has become a major force in the newspaper business. In a surprise move Wednesday, Alden filed an emergency motion in a U.S. Bankruptcy Court asking Judge Michael E. Wiles to stop Chatham from attempting to buy McClatchy through a credit bid, a transaction that would allow it to put the company debt it had assumed toward the purchase price.

Alden’s maneuver, which became known through redacted court documents, strongly suggested that it, too, has an interest in acquiring the 163-year-old McClatchy, a newspaper chain that fell on hard times not long after its $4.5 billion purchase in 2006 of its much larger rival, Knight Ridder.

Now that Alden has joined the proceedings, the auction, originally scheduled to start Wednesday morning, has been postponed indefinitely, McClatchy said in a court filing.

McClatchy’s filing said that it had “received two or more” bids for the chain.

In a filing Wednesday, Chatham objected to Alden’s emergency motion, stating “there is no emergency.”

Alden’s motion was first reported by McClatchy DC, a news site staffed by McClatchy journalists in Washington.

Alden’s MediaNews

Group is The Denver Post’s parent company.

Alden owns 32% of Tribune Publishing, the chain that operates The Chicago Tribune, The Baltimore Sun and newspapers in nine other major U.S. metropolitan areas. The hedge fund also has an interest in another newspaper chain, Lee Enterprises. Its MediaNews Group controls about 200 publications.

From 2004 to 2019, nearly half of all U.S. newspaper jobs were eliminated as the cumulative weekday circulation of print papers fell to 73 million from 122 million, according to a University of North Carolina study.