IBJNews

Emmis vote strips preferred shareholders of dividends

Back to TopCommentsE-mailPrintBookmark and Share

Shareholders of Emmis Communications Corp. on Tuesday voted in favor of wiping out $34 million in unpaid dividends owed to preferred shareholders.

The vote by proxy followed a Friday decision by U.S. District Judge Sarah Evans Barker in Indianapolis denying a request by some preferred shareholders for an order preventing a vote on the proposal.

Corre Opportunities Fund LP and other preferred stockholders had argued that Emmis board members and Chairman Jeff Smulyan failed to comply with state and federal disclosure laws.

But Barker disagreed, denying Corre’s request for an injunction that the preferred shareholders had argued for during a two-day hearing that ended Aug. 1.

“[Emmis has] shown a likelihood that, if an injunction were to issue and the vote be enjoined, both Emmis’s stock price as well as its efforts to refinance before the November 2012 deadline could be seriously and adversely affected,” Barker wrote.

Following the Friday decision, shares of Indianapolis-based Emmis climbed from $1.91 to $2.50 each. Shares were down 5 percent, to $2.37 late Tuesday morning.

Barker said in her 48-page decision that shareholders “could be adequately compensated for by an award of monetary damages, should they ultimately prevail [in court] after a full assessment of the evidence.”

Meanwhile, Emmis is attempting to move ahead with a plan to reduce debt and stabilize its financial condition.

“It’s the last step in the things that we’ve done to alter the credit landscape of the company,” Smulyan said Tuesday morning following the vote. “While many of our peers have gone bankrupt, we’ve survived, and now we’ve got a pretty exciting future.”

With a market capitalization of about $85 million, Emmis has more than 41 million shares of stock outstanding, 2.8 million of which are preferred shares whose holders were entitled to automatic dividends before the vote.

Those dividends, worth 6.25 percent of the preferred shares’ $50 liquidation value, or $3.125, haven’t been paid since October 2008, the investors said in a court filing. Including those unpaid dividends, each preferred share is worth $62.12, according to a June 29 proxy statement.

Other measures on the Tuesday ballot that passed included elimination of future preferred dividends unless declared and, with that, the abolition of preferred stockholders’ ability to elect two members to the company’s board as long as there are arrears.

Voters controlling more than 80 percent of the preferred stock and 72 percent of the common stock voted in favor of the resolutions.

There was little suspense to Tuesday morning's voting. That's because Smulyan singlehandedly controlled the majority of the common votes, thanks to a special class of shares he holds with extra voting power. In addition, he and the company control the majority of the preferred shares.

“Coming back from where we were is probably the most gratifying thing in my career,” he said.

Corre alleged in court papers that the move to strip preferred shareholders of their dividends is a prelude to Smulyan’s attempt to take the ninth-biggest U.S. radio station operator private.

Smulyan has denied intentions to privatize the company after failed attempts to do so in 2006 and 2010.

Emmis owns 20 radio stations. 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.
 

ADVERTISEMENT

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. Why should I a home owner pay for this"car sharing" ????

  2. By the way, the right to work law is intended to prevent forced union membership, not as a way to keep workers in bondage as you make it sound, Italiano. If union leadership would spend all of their funding on the workers, who they are supposed to be representing, instead of trying to buy political favor and living lavish lifestyles as a result of the forced membership, this law would never had been necessary.

  3. Unions once served a noble purpose before greed and apathy took over. Now most unions are just as bad or even worse than the ills they sought to correct. I don't believe I have seen a positive comment posted by you. If you don't like the way things are done here, why do you live here? It would seem a more liberal environment like New York or California would suit you better?

  4. just to clear it up... Straight No Chaser is an a capella group that formed at IU. They've toured nationally typically doing a capella arangements of everything from Old Songbook Standards to current hits on the radio.

  5. This surprises you? Mayor Marine pulled the same crap whenhe levered the assets of the water co up by half a billion $$$ then he created his GRAFTER PROGRAM called REBUILDINDY. That program did not do anything for the Ratepayors Water Infrastructure Assets except encumber them and FORCE invitable higher water and sewer rates on Ratepayors to cover debt coverage on the dough he stole FROM THE PUBLIC TRUST. The guy is morally bankrupt to the average taxpayer and Ratepayor.

ADVERTISEMENT