UPDATE 1-McClatchy gives Miami land buyer six more months
(Adds details from McClatchy statement)
NEW YORK, Dec 30 (Reuters) - Miami Herald publisher McClatchy Co (MNI.N) has given Citisquare Group LLC six more months to buy 10 acres of land that it had agreed to acquire from the U.S. newspaper publisher so it can arrange financing during the protracted world financial crisis.
McClatchy, which is struggling to pay off $2 billion in debt related to its purchase of defunct newspaper chain Knight Ridder Inc, the former parent company of the Herald, said that the land it plans to sell still will cost $190 million.
In a statement released Tuesday evening, the Sacramento, California-based publisher said the price includes $10 million that it has received in the form of a non-refundable deposit.
Citisquare will give up its right of first refusal to buy the Herald's building and underlying land, something that was included in the original agreement, McClatchy said.
Citisquare has the right to extend the agreement another six months until the end of 2009, which would raise the breakup fee that it would have to pay McClatchy if the deal fails. McClatchy did not say how much the breakup fee is.
"While we would have preferred to close the transaction at the end of this year so that we could repay debt with the proceeds, we are happy to have preserved an important deal for both parties," McClatchy Chief Financial Officer Pat Talamantes said. "We believe this extension will allow time for credit markets to improve so the buyer can obtain the needed financing to complete the deal."
The extension of the sale would not hurt McClatchy's ability to pay its debt, Talamantes added.
Citisquare is a partnership that was started by Knight Ridder and Pedro Martin, a Miami real estate developer and chief executive of the Terra Group.
Terra Group representatives were not immediately available for comment, and it was unclear who are Citisquare's current partners, apart from Terra Group.
McClatchy, Tribune Co and other U.S. newspaper publishers have been looking at selling their real estate in a bid to pay off money they have borrowed as advertising revenue, long their primary source of income, declines.
(Reporting by Robert MacMillan; Editing by Bernard Orr)
