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Emmis restructuring plan to be heard by federal judge

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Emmis Communications Corp.’s proposal to strip preferred shareholders of their right to collect millions of dollars in dividends is set to be heard Friday in federal court in Indianapolis.

The shareholders are attempting to block the plan and have asked a judge to issue a preliminary injunction to prevent Emmis from holding a special meeting where investors would vote on the plan to weaken preferred shareholders’ rights.

Emmis hopes to rekindle interest in its common shares, in part by freeing itself of the obligation to pay four years of dividends to the holders of preferred stock.

The media company says it amassed voting control over about two-thirds of the preferred stock as a result of a buyback program it launched last fall with $35 million in funding from Chicago financier Sam Zell. The company purchased those shares at a huge discount from holders worried over the company’s perilous finances.

Emmis had planned to hold the special meeting to vote on the plan. But a group of the shareholders filed suit in April to try to prevent the move. A federal judge is set to hear arguments from both sides on Friday and ultimately will decide whether Emmis can proceed with its proposal. The hearing is expected to last one day.

Preferred shareholders Kevan Fight, Corre Opportunities Fund, Zazove Associates, DJD Group and First Derivative Traders allege that Emmis CEO Jeff Smulyan and the company’s board of directors ignored Securities and Exchange Commission rules, failed to file proper documentation, engaged in back-room deals and are illegally attempting to squelch their rights.

In an e-mailed statement to IBJ, Emmis said it “remains confident that all its actions were consistent with applicable state and federal laws.”

Emmis on Wednesday submitted to the federal court a list of witnesses that are expected to testify at the trial. They include Smulyan, Emmis Chief Operating Officer Patrick Walsh, and company board members Susan Bayh, Lawrence Sorrell and David Gale.

Shares of Emmis are fetching $1.43 each and rose above $1 in late April after the company announced two deals that will give it a $92 million cash infusion. The stock climbed as high as $1.63 on May 2 and has slid as low as $1.27 within the past month.

Emmis owns 17 FM and two AM radio stations nationwide, and seven city and specialty magazines. Locally, it operates WFNI-AM 1070, WIBC-FM 93.1, WLHK-FM 97.1 and WYXB-FM 105.7, as well as Indianapolis Monthly magazine.
 

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  • rule change
    Unless there's something in it for them, shareholders of the preferred stock have reason to fighht this. This sounds like Emmis is changing the rules in the middle of the game.

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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