McClatchy wraps exchange for $1.15 billion notes, waives minimum

By Jennifer Chiou

New York, June 26 - McClatchy Co. said it completed its private offer to issue new debt securities and cash in exchange for its $170 million principal amount outstanding of 7 1/8% notes due 2011, $180 million principal amount outstanding of 4 5/8% notes due 2014, $400 million principal amount outstanding of 5¾% notes due 2017, $100 million principal amount outstanding of 7.15% debentures due 2027 and $300 million principal amount outstanding of 6 7/8% debentures due 2029.

The company also said it waived the condition that a minimum amount of notes be tendered.

The expiration date was 5 p.m. ET on June 25, previously pushed back from 5 p.m. ET on June 22.

Holders tendered $3.8 million of the 7 1/8% notes, $11.1 million of the 4 5/8% notes, $53.4 million of the 5¾% notes, $10.8 million of its 7.15% debentures and $23.8 million of its 6 7/8% debentures.

As already noted, the minimum condition required that the company issue at least a total principal amount of $50 million of its 15¾% senior notes due 2014 in exchange for existing notes.

McClatchy announced the exchange on May 21, saying it was offering to exchange the old notes for up to $60 million in cash and up to $175 million of newly issued 15¾% senior notes due 2014.

The new notes will be senior unsecured obligations and will be guaranteed by McClatchy's material domestic subsidiaries. Because of this, any old notes that remain outstanding following the exchange offer will be structurally subordinated to the new notes.

For each $1,000 principal amount, the company is offering:

• $330 for the 7 1/8% notes in the form of cash or new notes. These notes have an acceptance priority level of 1;

• $275 for the 4 5/8% notes in the form of cash and new notes or new notes only. For holders who choose cash and new notes, the amount of cash will be determined based on the total amount of 4 5/8% notes submitted in the exchange for this option, subject to a maximum of $200 per $1,000 principal amount of notes and a total cash consideration equal to the lesser of (i) $25 million and (ii) $60 million less the amount of cash consideration paid for 7 1/8% notes tendered and accepted.

The 4 5/8% notes have an acceptance priority level of 1;

• $270 of new notes for the 5¾% notes, which have an acceptance priority level of 2;

• $260 of new notes for the 7.15% debentures, which have an acceptance priority level of 3; and

• $260 of new notes for the 6 7/8% debentures, which have an acceptance priority level of 3.

In each case, the amount on offer includes an $80 early participation premium for notes tendered by the early tender date, which was 5 p.m. ET on June 8.

Holders will also receive accrued interest up to but excluding the settlement date.

The company noted that it will not accept any old notes that would result in the issuance of less than $2,000 principal amount of new notes.

Notes will be accepted in the order of their acceptance priority levels. McClatchy already said there will be enough cash and new notes for it to accept all of the 7 1/8% notes and 4 5/8% notes, and the remaining debt securities may be prorated.

Under the original terms, the exchange offer was conditioned on a minimum of $50 million principal amount of notes being issued.

The exchange offer was made only to qualified institutional buyers inside the United States and to certain non-U.S. investors located outside the United States.

Global Bondholder Services Corp. (866 540-1500) was the information agent.

McClatchy is a newspaper company based in Sacramento.

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