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MediaNews credit facility commitment totals $687 million for purchase of two McClatchy papers
By Sara Rosenberg
New York, May 1 - MediaNews Group Inc. revealed that the credit facility commitment in connection with the acquisition of two northern California papers from The McClatchy Co. is for up to $687 million, according to an 8-K filed with the Securities and Exchange Commission Monday.
Bank of America is the lead bank on the deal.
Under the acquisition agreement, MediaNews is buying the San Jose Mercury News and Contra Costa Times. The newspapers are currently owned by Knight-Ridder Inc., which McClatchy agreed last month to acquire.
MediaNews plans to contribute the two newspapers to California Newspapers Partnership, owned 54.23% by MediaNews. Gannett and Stephens Media, the remaining partners, have committed to contribute their share of the purchase price.
McClatchy has also agreed to sell two other Knight-Ridder papers to Hearst Corp. - the Monterey Herald and the St. Paul Pioneer Press.
Under a separate agreement between Hearst and MediaNews, Hearst has agreed to contribute the St. Paul Pioneer Press and Monterey Herald to MediaNews in return for an equity investment in the non San Francisco Bay Area assets of MediaNews, subject to, among other things, regulatory approval. In the event such transaction is not consummated, MediaNews has agreed to acquire these newspapers from Hearst.
For the sale of the four newspapers, McClatchy will receive $1 billion in cash. Net after-tax proceeds of about $700 million from these four sales will be used to pay down debt incurred from the pending acquisition of Knight Ridder.
MediaNews is a Denver-based newspaper company.
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