Emmis Communications Corp. CEO Jeff Smulyan’s JS Acquisition LLC is suing its one-time financier for backing out of a deal to take the Indianapolis-based media company private.

Attorneys filed a breach of contract claim against three Alden Global Capital units Wednesday in Marion Superior Court, saying the going-private transaction failed when Alden changed course after months of negotiations with a group of preferred shareholders—costing JS Acquisition "significant' fees and other expenses.

Alden executives were not immediately available for comment.

Alden and JS Acquisition, a private company formed by Smulyan to complete the buyout, agreed in April to take Emmis private. But in July, nine dissident investors—holding a combined 38 percent of the company’s preferred shares—emerged to block the $90 million deal.

They balked at Smulyan’s initial offer to convert their holdings 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.

Negotiations among the three groups began in late July, the lawsuit said, and by Aug. 5 the preferred shareholders had agreed to a sweetened offer that increased the bonds to 77.5 percent of the share value and adjusted the interest rate by an undisclosed amount.

The lawsuit said Alden confirmed the terms of the new agreement on Aug. 6 and Aug. 7, then rejected the modifications on Aug. 20. A few days later, according to the suit, Alden principal Randy Smith told JS Acquisition that a “precipitous” drop in radio-industry assets made the deal unattractive.

In the weeks before the dissident investors said they would block the transaction, radio industry shares as a whole “plummeted,” the lawsuit said, but that “did not give Alden the right to escape its obligations” to fund the transaction.

Emmis shares have declined in value by about 13 percent since the April going-private announcement, closing Wednesday at $1.09. Shares were down about 5 percent when the preferred shareholders first raised objections.

Smulyan’s proposal also required approval from the holders of a majority of Emmis shares, a threshold he had the votes to meet when the deal officially was called off Sept. 9.

As a result of what it calls Alden’s breach of contract, JS Acquisition incurred “significant” fees and other expenses, and “justice and equity requires that Alden reimburse” the company. It is asking for a jury trial.

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.