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Smulyan fails to take Emmis private

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Year In Review

Jeff Smulyan in 2010 tried for the second time in four years to take Emmis Communications Corp. private, only to see a group of dissident investors band together to block the deal at the 11th hour.

Smulyan, Emmis’ chairman and CEO, offered $2.40 for each common share, a price that valued the entire company at $90 million. Closing the deal hinged on getting Emmis’ preferred shareholders to accept a 60-cents-on-the-dollar swap for new bonds carrying a higher interest rate.

The preferred investors in the fall launched talks to sweeten the deal, and Emmis agreed to up the value of the bonds to 77.5 cents on the dollar.

According to Emmis, Smulyan’s financial partner, New York-based Alden Global Capital, initially agreed to the modifications. But a few days later, Alden principal Randy Smith told Smulyan a “precipitous” drop in the value of radio-industry assets made the deal unattractive.

After the buyout unraveled, Emmis shares plummeted, and they now trade for only about 50 cents apiece. The low stock price reflects investor anxiety over the company’s more than $340 million in senior bank debt.

But Smulyan has contended that concerns about excessive debt are overblown.

Smulyan founded Emmis in 1981. The company 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.

When Smulyan tried to take Emmis private in 2006, he offered $15.25 a share, but was unable to reach agreement with the board. Emmis’ stock price later plunged, in part because of a deep slump in radio advertising.•

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