CFO Elaine Lintecum stated: "This decision is not taken lightly, but at a time when the Company is actively negotiating the future of the qualified pension plan, it would be inconsistent with our culture to continue payments on the non-qualified plans."
The news follows the release of McClatchy’s Q3 2019 financials in November, which outlined the company’s plans to negotiate capital and pension restructuring with PBGC and key stakeholders.
During the same period, McClatchy stated it might be forced to file for bankruptcy, due to the strain caused by the pension plan, if it couldn’t find support from the government.
McClatchy owes approximately $124 million in pension contributions in 2020, an amount the company says exceeds its anticipated cash balances and cash flow.
The company approached the IRS, requesting a waiver of the minimum-required contributions to its defined benefit pension plan for a three-year period, covering 2019, 2020 and 2021. The request was denied, leaving the company with the task of seeking other means of pension relief.
Craig Forman, McClatchy's President-CEO, stated at the time: "We are working hard to find solutions for the company and its more than 24,000 pensioners. We have voluntarily contributed nearly 44% of the existing assets in the plan rather than limiting company contributions to the minimum amounts required to be contributed by law.
"Our current workforce of nearly 2,800 employees represents about one in 10 pensioners. Those who joined the company in the last 10 years do not participate in a plan they are working to support, one that was frozen to new participants in 2009.”
Discussions around the issue of pensions and debt are ongoing, the company stated. However, the pause in pension contributions will not impact the company’s continuing operations or benefits covered by McClatchy’s $1.3 billion qualified pension.
As part of a restructuring at the company, 1% of its workforce will be laid off, per a memo from vice president of news Kristin Roberts in October.
Late last year, McClatchy received a notice from the New York Stock Exchange American (NYSE) that it was not in compliance with certain listing standards and had 18 months to become compliant.In December, the NYSE American approved McClatchy’s plan to regain compliance, giving the company until March 9, 2021, to execute its plan.