A McClatchy news release said the company will lease back the property from its pension plan for 10 years for about $4 million annually paid to the plan. The property will be managed by WhiteStar Advisors, LLC , an independent real estate advisory firm hired by the pension plan. WhiteStar, in turn, hired independent real estate appraisers to determine the value of the real estate contributed to the plan.
McClatchy said the plan’s actuary is expected to determine the exact amount of its required 2011 contribution in the third quarter; the company has estimated the payment at around $50 million, according to the news release. Any additional money due to the plan will be paid in cash, McClatchy said.
“We view this as a win-win transaction for both the pension plan and the company,” said Pat Talamantes, McClatchy’s chief financial officer, in the news release. “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.”
The property includes buildings and land occupied by seven McClatchy papers in Bradenton, Florida; Charlotte, North Carolina; Lexington, Kentucky; Macon, Georgia; Myrtle Beach, South Carolina; Olympia, Washington; and Rock Hill, South Carolina, and has been valued by independent appraisals at approximately $49.6 million in total.
Global drink producer Diageo PLC said in mid-July 2010 that it was transferring more than two million barrels of its maturing whisky to its pension fund as it sought to plug its GBP862 million pension deficit (see Drink Maker Uses Alternative Asset to Plug Pension Deficit).