IBJNews

Emmis shares skid ahead of buyout vote

Back to TopCommentsE-mailPrintBookmark and Share

Shareholders of Emmis Communications Corp. will vote Tuesday night at the company’s Monument Circle headquarters on whether to allow a sale to Chairman and CEO Jeff Smulyan.

But on Wall Street, the votes are leaning increasingly against Smulyan’s chances to take the radio and magazine company private.

Emmis shares lost 11 percent of their value on Monday and slid another 6 percent in the first two hours of trading Tuesday morning. The shares now can be bought for $1.65 apiece.

That’s more than 30 percent below the buyout offer of $2.40 per share, extended by Smulyan and Alden Global Capital, the New York-based private equity firm backing his bid.

Their tender offer for common shares ends today at 5 p.m. The vote will be held at a meeting at 6:30 p.m.

“Somebody’s concerned that the deal’s not going to happen,” said Mark Foster, chief investment officer at Kirr Marbach & Co. in Columbus, Ind., which does not own any Emmis shares. He said that when a company’s current trading price falls more than 12 percent of 15 percent below an offered buyout price, he starts to doubt a deal actually will be sealed.

Smulyan’s buyout bid has been threatened by shareholder lawsuits since just days after he announced his plans in April. Litigation in Marion County is ongoing, although a judge last week denied shareholders’ requests to halt the sale process until the case is resolved.

But the biggest cloud over the Emmis deal came last month when eight firms that hold Emmis’ preferred stock banded together to block the deal. Collectively they hold 34 percent of Emmis’ preferred shares.

That’s enough to prevent Smulyan from winning two-thirds approval from preferred shareholders to convert their shares into bonds—at 60 cents on the dollar—in exchange for the attractive interest rate of 12 percent.

That conversion, in addition to approval by a majority of Emmis' common shareholders, is necessary to allow the buyout to go through.

Since the preferred shareholders announced their so-called “lock-up agreement” on July 9, Emmis shares have lost 27 percent of their value, with the biggest slide coming in the past two days.

“The risk, from an arbitrage standpoint, has just gone up a bunch,” said Bob Shortle, senior managing director at Periculum Capital LLC, an Indianapolis-based investment banking firm.

Emmis spokeswoman Kate Snedeker declined to comment on the liklihood of the buyout winning approval Tuesday night.

Because Emmis’ trading volume is so thin—just 266,000 shares a day—Shortle thinks some investors are selling now instead of taking a risk that the buyout deal will fail, making it more difficult to find buyers for their Emmis shares.

“If all of a sudden, they announce this isn’t going to happen, I would expect the price to drop,” Shortle said.

Founded by Smulyan in 1981, 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.

The company’s audience base has been trimmed by competition from satellite radio and iPods at the same time advertisers have funneled more dollars to the increasing number of websites and cable television channels.

Over the past four years, Emmis’ revenue has swooned by 33 percent to $243 million. Its continuing operations have wracked up losses of more than $430 million.

That performance has caused Emmis’ share price to plunge since the last time Smulyan tried to take the company private in May 2006. At that time, Smulyan’s buyout group offered $15.25 per common share, but could not come to terms with the company’s board of directors.

ADVERTISEMENT

  • devourdowntown.org
    The ad is terrible ... I understand it is supposed to be clever, but looks more like a distorted face. Does not depict a fun event. Sorry.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Angela IS the best RD

  2. We are a nation of speed. All of our younger lives are filled with deadlines, quotas and bottom lines. We start to ease out of the pressured rat-race when we finally see "retirement." The most enjoyable travel on the planet is passenger rail service. Indy to Chicago does not beat Megabus or Southwest Airlines in speed. Passenger rail however has the best seating, mammoth legroon, seat backs that recline to more than 45 degrees and employers that really want you to return as a customer. Indiana municipalities need to maintain subsidies to support this transportation mode. Losing it is loss for all of us.

  3. Good day! I just want to testify how i got my loan from Mr. Eric Lefkofsky after i applied several times from various loan lenders who claimed to also testify right in this forum,i thought the testimonies where real and i applied but they never gave me loan. I was in need of an urgent loan to start a business and i applied from various loan lenders who promised to help but they never gave me the loan. Until a friend of mine introduce me to this popular Mr. Eric Lefkofsky who promised to help me and indeed he did as he promised without any form of delay. I never thought there are still reliable loan lenders until i met Mr. Eric lefkofsky who indeed helped me with the loan and changed my belief. I promised to share this testimony after I got my loan. I don't know if you are in any way in need of a genuine and urgent loan,free feel to contact Mr. Eric Lefkofsky via their email{grouponfunding@hotmail.com}

  4. Its a THUG issue. Bleecker Street and NYX are thug bars. They attract thugs of all races. Places that attract thugs need to be kicked out of Broad Ripple. Ain't nobody got time for that!

  5. Hello everyone, My name is Marian Gareth, I am from the Texas, United State, am here to testify of how i got my loan from Mr Andre Frank {frankloancompany@yahoo.com} after i applied Two times from various loan lenders who claimed to be lenders right in this forum,i thought their lending where real and i applied but they never gave me loan. I was in need of an urgent loan to start a business and i applied from various loan lenders who promised to help but they never gave me the loan.Until a friend of mine introduce me to Mr Andre Frank the C.E.O of Andre Frank Loan Company who promised to help me with a loan of my desire and he really did as he promised without any form of delay, I never thought there are still reliable loan lenders until i met Mr Andre Frank, who really help me with my loan and changed my lief for better. I don't know if you are in need of an urgent loan, free feel to contact Mr Andre Frank on his email{ Frankloancompany@yahoo.com} for help

ADVERTISEMENT