(The answer was no, and I retired on June 30, three days after the McClatchy deal closed.). Federal regulators have been asking questions, too. 2023 BridgeTower Media. In recent months it put together the bid that has been declared the winner in a U.S. Bankruptcy Court auction supervised by Judge Michael E. Wiles, a McClatchy spokeswoman said on Sunday. New Jersey, which has generated a more-than 12% annualized return on its investment, is entitled to withdraw $355 million from one of Chathams funds at the end of this year. , Bloomberg. His behavior infuriated some senior executives, according to former colleagues. Any McClatchy employees hoping that Chatham might not be as bad as the hedge fund Alden Global Capital, which has decimated the Denver Post and other papers in its stranglehold, should consider this: Chatham is the majority owner of American Media, which owns the tabloid National Enquirer which hardly recommends Chatham as a potential restorer of the 29-paper chain to the newspaper industrys top ranks. What it does, apparently, is make its clients lots of money. That money was part of a deal the company had struck with Karen McDougal, a Playboy model who said she had an affair with Donald J. Trump. They are scrappy, and they arent afraid of litigation to defend their investments, said Leon Cooperman, a recently retired hedge fund mogul who is a Chatham investor and part owner of American Media, the Enquirers publisher. Sue, Chatham lawyers warned, and well drag your family into this, according to court testimony. AMIhas deniedit helped Trumps campaign, although Pecker was recently granted immunity as part of the Cohen probe. Use of this website is subject to its Terms of Use | Privacy Policy | Your California Privacy Rights/Privacy Policy | Do Not Sell My Info/Cookie Policy. That's why all these financial players Chatham Asset Management here, Alden Global Capital, Fortress Investment Group, and Apollo Global Management elsewhere find newspapers such a hospitable environment. There are often clauses in agreements between pension funds and hedge funds that give states certain rights and recourse if they believe retirees money has been invested in companies engaging in criminal activity, he said. Last year, barely three months before Christie left office, his administrationsteeredanother $200 million to another Chatham vehicle. The regulator declined to comment. For the low-profile Chatham, American Media has become a high-profile headache. Seaport Global defended its practices. Chathams trading has drawn scrutiny before. Before long, the Chatham camp would make good on its threat against that executive, unleashing a tale of sex and money worthy of the Enquirer. The investigation was supervised by Sheldon Pollock. They make money for their clients.. That kind of showing helped the firm attract $300 million from investors this quarter, a person familiar with the matter said. Whalewisdom has at least 9 13F filings, 19 13D filings, 29 13G filings, and 127 Form 4 filings Summary Holdings Ind. It doesnt employ a lot of people, and I doubt if it sponsors arts organizations and gives to charities in Chatham. A March 2019 Fortune magazine story said Melchiorre, who is either 51 or 52, was raised in Chicago, studied economics at Northwestern and got an MBA from the University of Chicago. But just on the outside chance he does come around, would somebody please take his picture and send it to me? Despite the companys financial distress, its bonds traded near par until December, and after dropping, have been climbing back. Main Office American Media acquired her story for $150,000 and never published it, a practice known as catch-and-kill. The guy who will be drawing the blood, Anthony Melchiorre, apparently is a piece of work. Postmedia is under investigation by Canadian regulators over a deal with a rival publisher, Torstar, the owner of The Toronto Star, that resulted in the closing of 36 newspapers and the loss of nearly 300 jobs. The hedge fund is run by Anthony Melchiorre, a GOP donor whoreportedlymetwith the president and AMI CEO David Pecker at the White House soon after Trump took office. Products. In that same period, the editorial ranks at The National Post, its flagship paper, have been reduced by about a third, according to three of the people. But many dailies remained sources of reliable cash flow, making them attractive investments for owners focused on maximizing returns. In that sense, they are perfect victims for scavengers. The announcement, which signals an end to 163 years of family ownership, underlines the growing influence of the finance industry on American newspapers. With McClatchy, the hedge fund also designed a trade aimed at reaping a windfall through credit-default swaps. I am personally appalled by the Enquirer being an accessory to Cohens criminal behavior on behalf of the candidate, said Tom Bruno, a state union representative who is the chairman of the pensions board of trustees and serves on New Jerseys State Investment Council, which oversees the pension systems investments. Sign up for your daily digest of New Jersey News. And in 2006, when McClatchy bought out Knight Ridder, McClatchy C.E.O. This much is sure: Chatham founder Melchiorre, 51, has a formidable reputation. Hes a street fighter, said Mike Rankowitz, his boss at Morgan Stanley. The SEC has increased its focus on the valuation of securities across the market, said Jacob Frenkel, a lawyer at Dickinson Wright. Although not physically imposing, Melchiorre could be foul-mouthed and loud, and would berate fellow traders as he bopped around the trading floor in his stocking feet. "We remain vigilant in rooting out such misconduct in the marketplace, including in the fixed income sector, where investments can be less liquid.". Freelance budgets have shrunk at Postmedia, and travel expenses have been severely curtailed, the people said. With roots going back to 1857, McClatchy, a consistent winner of top journalism awards, was one of the last major family-run news publishers. Chris Christies administrationmoved$300 millionof pension cash into the Chatham Fund, LP, which hasowneda stake in AMI, according to SEC records. For the sake of McClatchys approximately 2,800 employees (for comparisons sake, The Star alone had more than 2,000 employees about 20 years ago), Im sorry to say things could get a lot worse before theres any chance of getting better. Powered and implemented by Interactive Data Managed Solutions. But Im not now. Enter your email address to subscribe to this blog and receive notifications of new posts by email. And as it happened, the hedge fund owned the tabloid, the National Enquirer, that he had just used to try and catch and kill stories about the future president. Such wagers have come under increased scrutiny from regulators in the last year. Its a huge problem, and its getting to the point where its unacceptable.. The private equity fund Fortress Investment Group controls the largest American newspaper chain, Gannett, which publishes USA Today, The Arizona Republic and 250 other dailies. At least one executivethe one Cohen and Pecker sparred withhas accused the New Jersey firm of market manipulation. Federal regulators have been asking questions, too. Melchiorre and his. Named after the leafy suburb where its based, Chatham has posted average annual returns of about 10 percent, trouncing many of its competitors. The SECs investigation was conducted by Daphne Downes, Brian Fitzpatrick, and Lindsay S. Moilanen, with assistance from Carina Chambarry and Raymond Wolff of the SECs Division of Economic and Risk Analysis. Grimstad knows what its like to be under a tabloid-like glare. American Media now owes debtholders in excess of $1 billion, more than the book value of its assets. The hedge fundfinalized its dealto buy an ownership stake in AMI in the summer of 2014. Washington, D.C.--(Newsfile Corp. - April 3, 2023) - The Securities and Exchange Commission today charged New Jersey-based Chatham Asset Management LLC and its founder, Anthony Melchiorre, in . Google and Facebook came to dominate the online ad market, hampering publishers attempts to generate the necessary revenue from digital advertising. Owning a majority of the approximately $1.2 billion in outstanding principal amount of 11% first lien senior secured notes due 2026, and virtually all of the approximately $439 million in outstanding principal amount of 13% second lien senior secured notes due 2027. Moreover, the SEC found that Chatham and Mr. Melchiorre calculated the net asset values of their client funds' holdings using pricing data that was based, in part, on the trading prices of the securities. The state has said its exploring its options in light of Bezoss claim that American Media tried to blackmail him. A New Jersey Treasury Department spokesperson said in an email that its Division of Investment is in regular contact with its investment partners regarding underlying portfolio companies and provides feedback when appropriate. Cohens involvement was detailed by people with knowledge of the talks. Well, this company, Chatham Asset Management, doesnt do a lot that would make it want to call attention to itself. Finra, the brokerage industrys main watchdog, subsequently concluded its review, and its unclear what if anything resulted from it. Altogether, the company has cut over 1,600 employees since 2016, or 38 percent of its staff, based on company filings. But Melchiorre? The firms assets have doubled in the past three years. Offers may be subject to change without notice. Now he was working on behalf of Chatham Asset Management, a $4.3 billion hedge fund that owns the National Enquirer. Two other old-line media investments, Postmedia Network Canada Corp. and McClatchy Co., have become central to Chatham and its thesis that itll make money in an industry others are fleeing. Grimstad claimed Chatham artificially drove down the price of the bonds by almost 30 percent in a single trade, effectively blocking a debt-restructuring effort so it could capture control of the company. The owner, (whose only hope to save journalism in this second or third tier town), is digital publishinghas no web site! Soon after, he crossed the Hudson River to set up his own hedge fund in Chatham, N.J. Mr. Melchiorre manages over $4 billion in assets for clients through various funds, including some listed under a Cayman Islands address, where more favorable tax rates apply. A spokeswoman for Cohen declined to comment, and a spokesman for American Media and Pecker didnt respond to requests for comment. Hedge fund Chatham Asset Management and its founder, Anthony Melchiorre, agreed to pay more than $19 million to settle US allegations that the firm improperly traded bonds in a media company that owned the National Enquirer.. Apr 3, 2023. Anyone can read what you share. Get our free e-alerts & breaking news notifications! During the last five years, taxpayers in New Jersey, Ohio and California have owned large financial stakes in the owner of the media company that allegedly helped the Trump campaign bury negative stories, according to documents reviewed by Capital & Main and MapLight. Chathams and Melchiorres trading in the AMI bonds accounted for the vast majority of trading in those securities and therefore over time had a material effect on their pricing. It even offered lower yields than some blue-chip companies. Chatham has never had any relationship with, spoken to or compensated Michael Cohen, a representative for the firm said in response to queries from Bloomberg. Anthony Melchiorre has served as Managing Member/Portfolio Manager of Chatham Asset Management, LLC since 2003. An SEC spokesman declined to comment. In the interest letter to Vericast CEO John O'Malley, Chantham Managing Member Anthony Melchiorre detailed CAM's longstanding investments in the company, including: Serving as the lead backstop. Although not physically imposing, Melchiorre could be foul-mouthed and loud, and would berate fellow traders as he bopped around the trading floor in his stocking feet. In 2016, the Financial Industry Regulatory Authority opened a review of the brokerage Seaport Global Securities that, while focusing on that firm, included an examination of its relationship with Chatham, people familiar with the matter said. Chatham Asset Management, a New Jersey-based hedge fund, and its founder, Anthony Melchiorre, have agreed to pay a $19.3 million fine for tampering with the sale process for bonds of. Hedge funds and private equity firms have had a growing presence in the news industry, to the chagrin of press advocates who argue that financial firms do not make civic-minded stewards of a business built largely on holding the powerful to account. Chatham and Melchiorre agreed to pay more than $19.3 million in combined disgorgement, prejudgment interest, and civil penalties to settle the charges. The SECs order also finds that Chatham and Melchiorre calculated the net asset values, or NAVs, of their client funds holdings using pricing data that was based, in part, on the trading prices of the securities. Found 4 colleagues at Chatham Asset Management. [2]: The hedge fund also has officials who serve as directors at AMI. And given the strains in the print-media business, the strong price of the debt is difficult to explain, traders say. The notes dont pay regular interest in cash, a sign of their inherent riskiness. Clearly, the writing is on the digital wall. To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Shahien Nasiripour in New York at snasiripour1@bloomberg.net, To contact the editors responsible for this story: Caroline Salas Gage at csalas1@bloomberg.net, ;David Gillen at dgillen3@bloomberg.net, David Scheer, Canada joins U.S., U.K. in diplomatic boycott of Beijing games, Canada's ambassador to China steps down after Huawei crisis, Trudeau weighs auto-content rules as next U.S. trade flashpoint. In all three cases, Chatham bought most of the subordinated bonds, plus stock. Chatham is led by Anthony Melchiorre, a Chicago-area native who has earned a reputation on Wall Street as a tough negotiator. (The most memorable thing he said was Disney would not be selling the papers anytime soon, but they were on the block a year later.). Like Warren Buffett, Wall Street traders and just about everyone else, Chatham has no illusions about where the newspaper industry is headed; it just wants to bleed them of cash, or, perhaps, sell them at a nice profit to another chain. These cookies will be stored in your browser only with your consent. Chatham Asset Management LLC and its founder Anthony Melchiorre have agreed to pay more than $19.3 million to settle charges in connection with improper . Their bonds, though, havent suffered. The ugly litigation with the tech executive was resolved with a less-than-remorseful apology and a multimillion-dollar payday for Grimstad. The new, supersize version of Gannett resulted from a merger last year between Gannett and the parent of GateHouse Media. Investment Advisor The Securities and Exchange Commission has stepped up examinations of various bond funds lately, inquiring about their relationships with brokers and how they value debt. Yet its junior bonds offer yields comparable to more senior securities. In October 2016, a New Jersey hedge fund assumed ownership of Canadas largest newspaper chain with very little fanfare. Within weeks, the notes were back at about par. Katherine Burton, Sridhar Natarajan and Shahien Nasiripour, Bloomberg News, National Enquirer tabloid newspapers. During that time, it invested relatively little, about $5.4 million, to try to improve the business. 130 E. Randolph St. That made it one of the best performing bonds in the world at the time. The New York Post put the story on its front page under the headline Frisky Business. (Grimstad has called those allegations false and meritless.). Chatham Asset Management to Pay $19.3M to Settle SEC Charges. Chatham investment firm moves to acquire Vericast for $2.85B. What asset class is best for corporate plans' growth investments when using LDI? Last week, that kind of financial maneuvering reappeared in another major newspaper deal, when Chatham emerged as the winning bidder in a bankruptcy auction for the McClatchy Company, a chain with 30 media outlets including The Miami Herald, The Kansas City Star and The Sacramento Bee. The Ohio pension system did not respond to questions about whether it will seek to divest assets from Chatham. Good writing. It needs to be bolstered and rebuilt, not milked for whatever profit it can still produce., Chatham Hedge Fund Has the Winning Bid for McClatchy Newspapers, https://www.nytimes.com/2020/07/12/business/media/hedge-fund-mcclatchy-newspapers.html. Thats exactly what happened. CHATHAM ASSET HIGH YIELD OFFSHORE FUND, LTD. CHATHAM ASSET PARTNERS HIGH YIELD FUND, L.P. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. Hes a street fighter, said Mike Rankowitz, his boss at Morgan Stanley. or to simply have an email sent to you whenever we receive a new Chatham said at the time that the allegations were baseless and without merit. The fund, Chatham Asset Management, acquired two-thirds of Postmedia, the publisher of The National Post, The Vancouver Sun and several other major Canadian papers, by trading a portion of the money it was owed for the majority ownership stake. When Knight Ridder bought The Star and three other Disney-owned papers in 1997, Im pretty sure Knight Ridder C.E.O. Thats something we wrestle with, he said. Its pretty frustrating, said Brian Gibson, the president of the local union that represents 140 members of the editorial staff at Postmedias Vancouver papers. In a statement, Craig Forman, the McClatchy chief executive, said Chatham would allow the company to continue providing strong news coverage. After sinking their claws into such companies, they suck out the cash and invest the money elsewhere, where they can get better, surer returns. Thats just not how bond math works, said Michael Terwilliger, a portfolio manager at Resource Credit Income Fund. Its bonds staged an improbable rally last year, charting a steady climb over 50% from 80 to 125 cents on the dollar. The threat was blunt: Back off, or there will be trouble. Chatham took on more American Media debt in recent months, getting Seaport to arrange a deal after Credit Suisse Group AG got cold feet amid public furor over the publishers antics in the 2016 presidential election. Hedge funds and private equity firms entered newsrooms during the Great Recession, when readers were migrating toward digital sources of news and local newspapers were losing value. Since Chatham Asset Management took over Postmedia, Canadas largest newspaper chain, 1,600 employees have been laid off and more than 30 papers shut down. Quantifying sustainability the numbers, the data, and the people, Valuing Banks: Hidden Losses Versus Assets, Research for Institutional Money Management, Global Fixed Income: Volatility and Uncertainty Here to Stay, For institutional investors, ETFs can make meeting liquidity needs easier, Gold: the most effective commodity investment, 2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios, Ten ways retirement plan professionals add value to plan sponsors. the MV of securities sold, whichever is less, Its no wonder Chathams side would enlist Cohen, long known for his doggedness on behalf of Trump. As a result, during the relevant period, the NAVs of Chathams clients were higher than they would have been if the subject trades were removed from the market for the AMI bonds, which, in turn, resulted in higher fees being charged to the clients. Despite the macroeconomic warnings of a recession and job[], A Cherry Hill-based financial institution is back on top of Small Business Administration lenders in New Jerse[]. Chatham Asset Management is based out of Chatham. CHATHAM, NJ Both have had roles in Chathams other media company, American Media, the publisher of The National Enquirer and other supermarket tabloids. Performance numbers calculated through 2022-05-16. . Terms & Conditions. At least five other traders whove looked at the bonds say their prices seem too good to be true. The 2016 presidential campaign had just ended, and Michael Cohen was fresh off handling hush money for Donald Trump. Yet its recent focus on tough-to-trade investments has given some clients pause, and initially drove off investors such as the Ohio state pension fund. The number of journalists at its Vancouver papers the Vancouver Sun and The Province has been cut in half, according to Mr. Gibson. This website uses cookies to improve your experience while you navigate through the website. Grimstad knows what its like to be under a tabloid-like glare. After Grimstad filed his suit, the Chatham camp countered, claiming Grimstad had used company money to pay a Las Vegas escort $4,000 for sexual activities and later hired her and her mother. Location Chatham, New Jersey, United States; Regions Greater New York Area, East Coast, Northeastern US; Chatham, an investor in the company since 2009, is its largest creditor. Then theres American Media. Chatham took a financial interest in McClatchy not long after its financial troubles began. Since Chatham took a majority stake in Postmedia, the company has cut its work force, shuttered papers across Canada, reduced salaries and benefits, and centralized editorial operations in a way that has made parts of its 106 newspapers into clones of one another. In recent months, Postmedia closed approximately 15 community publications and laid off 120 employees in response to the Covid-19 pandemic, The Toronto Star reported. The notes dont pay regular interest in cash, a sign of their inherent riskiness. It has made money in an ailing business partly by cutting the number of reporters and editors at The Denver Post and other publications, moves that have angered journalists and press advocates who accuse the firm of diminishing local news coverage. email address below and choose 'Submit'. The ugly litigation with the tech executive was resolved with a less-than-remorseful apology and a multimillion-dollar payday for Grimstad. After he departed amid a round of layoffs, Melchiorre quit Manhattan to join the Jersey Boys, a clique of hedge funders across the Hudson River that included billionaires Cooperman and David Tepper. It declined to comment further. Chatham had the winning bid for the McClatchy Company, the family-run publisher of The Sacramento Bee and other papers. This is all very bad news for The Kansas City Star and the other McClatchy papers. FORTUNE may receive compensation for some links to products and services on this website. Chatham hasnt been accused of wrongdoing by authorities, and the fund had no comment on its interactions with federal inspectors. The McClatchy chairman, Kevin S. McClatchy, the great-great-grandson of its founder, has said the companys inability to meet its pension obligations tipped it into bankruptcy. Former FEC commissioner Trevor Potter, the head of the nonprofit Campaign Legal Center,last week said the situation presents a serious legal problem for AMI. If those legal troubles end up depressing the market value of AMI, teachers, firefighters, cops and other public employees also could potentially suffer losses at a time when their pension funds are alreadyfacingshortfalls. Another McClatchy creditor, the New York hedge fund Brigade Capital Management, was named in a public filing as a partner of Chatham in the April bid. Currently investing in Vericasts term loan facility due 2026. The company that is poised to take control of McClatchy and its 29 daily papers doesnt have a website. SEC employees have questioned the firm on subjects including its pricing of bonds and conversations with various bond dealers. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices After sparking federal prosecutors ire for its role in burying Trumps secrets shortly before the 2016 election, the company has drawn international attention for its war with Jeff Bezos over its expos of his extramarital affair. That made it one of the best performing bonds in the world at the time. 685 Third Avenue From 2004 to 2019, roughly half of all newspaper jobs in the United States were eliminated, according to a University of North Carolina study. The SEC order found that these trades were executed at prices Chatham and Mr. Melchiorre proposed and had the effect of increasing the price of the AMI bonds at a significantly higher rate than the prices of similar securities. Tony Ridder came to the newsroom and spoke, although he was such a stone of a personality I dont specifically remember it. Chatham haswarnedthat its investments are risky and that a client may lose its entire investment in a troubled company. In early 2018, private equity giant BlackstoneremovedChatham from one of its major investment funds. Donnelley & Sons, McClatchy, Postmedia and Accelerate360. Chatham Asset Management, LLC Anthony Melchiorre Managing Member Dear Mr. Melchiorre, We are writing to follow up on our discussions with regards to your non-binding, conditional indication of interest to acquire R. R. Donnelley & Sons Company. Chatham Asset Management provides investment advisory services. Blue Sky Digital Outdoor Advertising Fund Fund Data, Sarasin Ie Global Equity Opportunities (Usd) Fund Data, Themelios Ventures Ii-A, L.P. Fund Data. Chatham, which manages about $4 billion in assets on behalf of its clients, is expected to become the majority owner in the third quarter of the year, McClatchy said, and the publicly traded. Its bonds rarely change hands. An SEC spokesman declined to comment. All text and design is copyright 2020 WhaleWisdom.com. Still, Chatham can elect one-third of Postmedias board, and it has debt covenants that give it huge sway over its long-term plans. Chatham Asset Management, LLC Anthony Melchiorre Managing Member Dear Mr. Melchiorre, We are writing to follow up on our discussions with regards to your non-binding, conditional indication of interest to acquire R. R. Donnelley & Sons Company.
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anthony melchiorre chatham asset management