Emmis Communications and Public Companies and Shareholders and Jeff Smulyan and Communications

Smulyan delays Emmis buyout vote again

September 8, 2010

Emmis Communications Corp. CEO Jeff Smulyan will try for the 10th time to take the company private after postponing a shareholders meeting scheduled for Wednesday evening.

Shareholders of the Indianapolis-based radio company will gather Thursday at 8:30 a.m. to decide the fate of Smulyan’s $90 million buyout bid.

Smulyan has been trying for weeks to strike a deal with a group of preferred shareholders that also appeals to his financier, New York-based Alden Global Capital.

He announced Aug. 30 that Alden had backed out of an “agreement in principle” to sweeten the terms for the preferred shareholders. The move rendered the entire deal “unlikely” to happen, according to the company’s own press release.

Emmis’ stock swooned on the news, falling by nearly 27 percent at one point. The shares have bounced back a bit, closing on Wednesday at $1.64—still well shy of Smulyan’s offering price of $2.40 per share.
 
Smulyan and Alden agreed in April to take Emmis private. But in July, nine dissident investors emerged to block the deal. They collectively hold 38 percent of the preferred shares—more than enough to prevent Smulyan from securing the necessary two-thirds vote required to approve his plan.

The dissidents balked at Smulyan’s initial offer to convert their shares into bonds worth only 60 percent of the value of the shares, but paying an interest rate nearly double the 6.25 percent the shareholders currently enjoy.

Smulyan’s proposal also requires approval from the holders of a majority of Emmis shares, a threshold he already has the votes to meet.

Founded by Smulyan in 1981, Indianapolis-based Emmis owns 23 radio stations in the United States and publishes regional magazines in seven cities, including Indianapolis Monthly. It also operates radio stations in Slovakia and Bulgaria.
 

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