Indianapolis-based Emmis Communications Corp. sued a former board member Friday, claiming he leaked information that resulted in a major holder of preferred stock dropping plans to resell those shares back to the company.
The suit alleges that Joseph R. Siegelbaum told Alden Capital Group about a confidential Emmis board meeting called for Oct. 25 to approve an offer by Alden to sell its preferred stock to the media company for $15 a share—a deal Alden said was good for seven days.
The deal included settlement of an ongoing legal battle between Emmis and Alden. The battle stems from New York-based Alden's decision a year ago to back out of a financing deal that would have taken Emmis private.
Hours after the board was alerted Oct. 24 about the following day's conference call, Alden contacted Emmis counsel to cancel the offer, Emmis claims.
Siegelbaum said during the Oct. 25 conference call that he informed Alden of the meeting, and then left the call, the suit says. Siegelbaum, who joined the board July 13, resigned Nov. 15.
It's not clear from the suit why Emmis believes Siegelbaum's disclosure of the meeting caused Alden to back out. Emmis would not comment further.
During the call, Emmis directors approved outside financing to repurchase as much as $35 million in preferred stock from Alden and other shareholders. Emmis said in a Nov. 14 regulatory filing that it had spent $11.7 million on repurchases as of that date.
Siegelbaum could not be reached immediately for comment.