The Postal Regulatory Commission (PRC) yesterday approved the Postal Service's request for an average 2% increase on market dominant products, ruling that the numbers were in line with price cap regulations. Forever stamp prices will remain the same, at 49 cents, but pre-sorted letters and postcards will go up 2.4% when the new rates take effect on April 26. The price of single-piece, machinable, metered letters will increase half a cent to 48.5 cents. In addition, USPS will raise the single-piece additional ounce price for letters from 21 to 22 cents and the single-piece postcard price from 34 to 35 cents. The first ounce price for single-piece flats remains at 98 cents.
McClatchy (NYSE American-MNI) announced today that it has entered into a Standstill Agreement with the Pension Benefit Guaranty Corporation (PBGC), extending its current runway for negotiating a consensual restructuring with key stakeholders.
As previously disclosed in the Company’s press release dated November 13, 2019, McClatchy has been in active restructuring negotiations with substantially all of its secured lenders and bondholders, as well as the PBGC, to address the future of its pension obligations and capital structure. The negotiations contemplate one or more deleveraging transactions, including some or all of the Company’s Second Lien Term Loans and Third Lien Notes, which are secured by second and third liens on substantially all of the Company’s assets.
In support of these negotiations, McClatchy has entered into non-disclosure agreements with lenders holding approximately 87 percent of the Company’s First Lien Notes and 100 percent of the Company’s Second Lien Term Loans and Third Lien Notes. These conversations are ongoing and productive, and the Standstill Agreement will allow McClatchy, as well as its lenders, the PBGC, and their respective legal and financial advisors, time to continue their negotiations.
“We want to acknowledge our lenders and the PBGC for working collaboratively and negotiating in good faith to reach a consensus on these important financial matters, which underpin McClatchy’s continuing commitment to publishing independent journalism in the public interest,” said Craig Forman, President and CEO of McClatchy. “We look forward to continuing to partner with these groups to reach an agreement that is in the best interests of our 24,000+ pension plan participants and other stakeholders, and positions McClatchy for the future. We remain focused on executing our strategy of digital transformation and producing strong, independent, local journalism that is essential to the 30 communities we serve.”
Under the terms of the Standstill Agreement, the PBGC has agreed not to exercise the remedies available to it as a result of McClatchy not making its scheduled qualified pension contribution due on January 15, 2020. Under the Standstill Agreement, the PBGC has agreed to a forbearance period until February 18, 2020, unless terminated earlier, subject to customary terms and conditions. In addition, McClatchy is availing itself of its option to defer paying interest on its secured debt for its contractual 30-day grace period, which is coterminous with the Standstill Agreement. There will be no impact on the qualified pension plan or payments thereunder as a result of the Standstill Agreement.
McClatchy is working towards a permanent solution under which the PBGC would assume McClatchy’s qualified pension plan and continue to pay the Company’s pension plan participants their benefits. Under current regulations, McClatchy believes that such a solution would not have an adverse impact on qualified pension benefits for substantially all participants. The assets of the qualified pension plan are estimated at $1.375 billion as of December 31, 2019, including approximately $580 million of voluntary contributions made by McClatchy, substantially greater than the contributions required by law.
As previously disclosed, on January 2, 2020, the Company announced that, as part of the ongoing negotiations, it would not release certain supplemental executive retirement benefits. Today’s action is consistent with withholding payments on the non-qualified plan.
McClatchy and its newsrooms are operating as usual. The Company has sufficient liquidity to address all of its ordinary course operational cash needs and obligations at this time. There can be no assurance that the ongoing discussions will result in any restructuring transaction, that the company will obtain any required stakeholder consent to consummate a restructuring transaction, or that the restructuring transaction will occur on a timely basis or at all.