Last week, McClatchy announced that two of its biggest creditors have submitted a non-binding proposal to buy the company – Chatham Asset Management and Brigade Capital Management. McClatchy, who is currently undergoing a voluntary Chapter 11 restructuring, began seeking proposals earlier this month. So far, more than 20 parties have expressed interest in submitting a bid to buy the second largest media organization in the country. If this initial bid is successful, McClatchy would remain a single company, and it would be free from its two primary debts, including substantial pension obligations.

“We appreciate the support of our principal existing lenders, who have come to the table with an offer that is generally consistent with our goals of addressing our legacy balance sheet issues and emerging from Chapter 11 as a viable going concern, while continuing to provide strong independent, local journalism in the public interest,” said Craig Forman, president and CEO, in an April 16 news release.

“Our mission of producing essential local news and information for the communities we serve has never been more vital. The interest in our business and mission reflects this, with more than 20 parties already under NDA and engaged in our process,” Forman added.

According to McClatchy’s announcement, Chatham Asset Management and Brigade Capital Management’s proposal sets a sale price “well in excess” of $300 million ($263 million in first-lien debt plus $30 million in new money) and a deadline of no later than July. Because the McClatchy is in the midst of bankruptcy, this initial proposal becomes a “floor” for further proposals, says McClatchy.

If the proposal is accepted by the U.S. Bankruptcy Court for the Southern District of New York, the creditors would buy McClatchy “as is,” and they would either assume or refinance McClatchy’s existing revolving debt and debts to other creditors.

Throughout the process, McClatchy is attempting to operate its 30 local newsrooms as normal, though nothing right now is normal amid the COVID-19 pandemic. On April 9, the company announced it would furlough 4.4% of its non-newsroom employees, four executives, and it would reduce executive compensation, reports CNN Business. With 2,700 employees, the furloughs impact approximately 115 employees who will temporarilyy be without jobs. The staff reductions primarily impact McClatchy’s advertising department, not the editorial side of the house.

“We’re taking some steps that help us make sure that our expenses are aligned with our revenue,” said Kristin Roberts, vice president of news for McClatchy, in an interview with CNN Business. “Everybody in the local news business and in the news business at large has seen their revenue pressured by the impact of the coronavirus. We have worked very carefully and quite precisely and that’s allowed us to insulate our news team from these cost reductions.”

Forman will take a 50% pay cut, and five other executives will take 15% pay cuts. In addition, four executive positions have been eliminated, resulting in staff layoffs.

“While customer revenues and our news operations in many ways are outperforming in key metrics, our advertising business is suffering despite an all-out effort from our team to beat the nationwide trends. We must, therefore, adjust while doing our utmost to safeguard the core mission of our enterprise: delivering news and information that is vital to our subscribers and customers in communities we serve across the country,” said Forman in an internal memo, obtained by CNN Business.

Insider Take:

Before the coronavirus pandemic hit, McClatchy was already in trouble, having filed for bankruptcy in February. Having 20+ parties interested in a possible purchase is the best care scenario for McClatchy, but it is clear there is a lot more than a sale at stake here. In a story about McClatchy by McClatchy, some serious questions have been raised about how McClatchy has handled its pension obligations. Timing, ongoing legal costs and the continued degradation of assets in the wake of COVID-19 are also issues. How will the bankruptcy court, creditors and bidders sort through it all, and who will end up the winner? Will another newspaper corporation snatch up McClatchy in a fire sale to grow their own share of the media market? We’re getting out the popcorn for what could be a wild show.