Business News
McClatchy Announces Contribution of Real Estate to Defined Benefit Pension Plan
Monday 17. January 2011 - The McClatchy Company (NYSE: MNI) announced today it has contributed certain company-owned real estate to its qualified defined benefit pension plan. The real estate, including certain land and buildings, is located in Bradenton, Fla.; Charlotte, N.C.; Lexington, Ky.; Macon, Ga.; Myrtle Beach, S.C.; Olympia, Wash.; and Rock Hill, S.C., and has been valued by independent appraisals at approximately $49.6 million in total.
The company is leasing back the property from its pension plan for 10 years and will pay aggregate annual rent of approximately $4.0 million to the pension plan. The contribution of the property will not have any impact on the company’s day-to-day operations at its newspapers in these locations. The property will be managed by WhiteStar Advisors, LLC (WhiteStar), an independent real estate advisory firm engaged by the pension plan. WhiteStar hired independent real estate appraisers to determine the value of the real estate contributed to the plan.
As previously announced, McClatchy expects its required pension contribution under federal law to be approximately $50 million in 2011. The contribution of real estate is expected to satisfy virtually all of the company’s required pension contribution for the year. The final amount of the 2011 contribution is expected to be determined in the third quarter of 2011 when the company’s actuaries complete the annual valuation of the pension plan. The remaining required contribution, if any, will be made in cash.
“We view this as a win-win transaction for both the pension plan and the company,” said Pat Talamantes, McClatchy’s chief financial officer. “Our pension plan will benefit from rental income from the company and from price appreciation as these properties hopefully gain in value over time. The company will, in turn, preserve its cash to repay debt.”
Talamantes said the company will be able to continue to use the facilities for the foreseeable future and will receive a cash tax benefit of approximately $7.2 million related to the net tax basis of the property contributed.