McClatchy Co. entered into a standstill agreement with the Pension Benefit Guaranty Corp. related to the company's underfunded pension program.

Under the terms of the standstill agreement, the PBGC agreed not to exercise the remedies available to it as a result of McClatchy not making its scheduled qualified pension contribution due Jan. 15. The PBGC agreed to a forbearance period until Feb. 18, unless terminated earlier.

McClatchy said it will take the option to defer paying interest on its secured debt for its contractual 30-day grace period. McClatchy is working toward a permanent solution under which the PBGC would assume McClatchy's qualified pension plan and continue to pay the company's pension plan participants their benefits.

The assets of the qualified pension plan are estimated at about $1.38 billion as of Dec. 31, 2019, including about $580 million of voluntary contributions made by McClatchy.

The company said it has been in active restructuring negotiations with substantially all of its secured lenders and bondholders, as well as the PBGC, to address the future of its pension obligations and capital structure. The negotiations contemplate one or more deleveraging transactions, including some or all of the company's second-lien term loans and third-lien notes, which are secured by second and third liens on substantially all of the company's assets.

To begin its restructuring, the company said it may be required to seek Chapter 11 protection.