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Smulyan delays Emmis buyout vote for 7th time

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For the seventh time, Emmis Communications CEO Jeff Smulyan delayed a vote on his plan to take the company private, this time by postponing a shareholders meeting scheduled for Thursday evening.

Instead, shareholders of the Indianapolis-based radio company will gather Friday morning at 8:30 to decide the fate of Smulyan’s $90 million buyout bid.

For weeks, Smulyan has failed to strike an deal with a group of preferred shareholders that also appeals to the liking of his financier, New York-based Alden Global Capital.

Smulyan announced Monday morning that Alden had backed out of an “agreement in principle” to sweeten the terms for the preferred shareholders. That move rendered the entire deal “unlikely” to happen, according to Smulyan’s own press release.

Emmis’ stock swooned on the news, falling by nearly 27 percent at one point Tuesday. The shares bounced back a bit Thursday to close at $1.59 apiece—which is still well shy of Smulyan’s offering price of $2.40 per share.

“Investors are betting against the deal being revived,” wrote Tom Taylor, news editor of the industry publication Radio-Info.com, on Tuesday. He noted that talks are ongoing but added, “It may be too late to save the deal.”

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.

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 websites and cable television channels.

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

This is not the first time Smulyan—the company's controlling shareholder—has tried to take Emmis private.

Smulyan made an offer in May 2006 to acquire all the shares of Emmis for $15.25 per share in a deal that valued the company’s stock at $567 million. He called off the deal a few months later after he couldn’t reach terms with the board. The company later declared a special $4-per-share dividend.
 

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