Wabash, Emmis suspend dividends

December 15, 2008

Trailer-maker Wabash National Corp. and broadcaster Emmis Communications Corp. are suspending dividend payments as the economy deteriorates.

Their announcements in recent days follow a September decision by Evansville-based Integra Bank Corp. to cut its dividend to a penny in order to build capital that had suffered from the housing downturn.

Lafayette-based Wabash National Corp. said today it would immediately suspend quarterly dividend payments, saving the company $5.5 million annually.

"We are confident that Wabash will emerge in a stronger position when the economy improves but, in the current downturn, the board believes that focusing the company's full resources toward the operational needs of the business is the most prudent course of action," CEO Richard Giromini said in a statement.

On Friday, Indianapolis-based Emmis said it will not make a quarterly dividend payment on its Series A Cumulative Convertible Preferred Stock. It had been scheduled to pay dividends on the security totaling $2.25 million in January. Interest on the unpaid dividends will accrue at 6.25 percent.

The company does not pay a regular dividend on its common stock.

Financial institutions began suspending dividends early this year, and the trend has spread to other businesses as they seek to outlast the recession, said Mark Cremonie, vice president and senior investment officer at Old National Trust Co.

"It's reasonable for at least the next six months or so to expect other companies to have the same situation," he said.

Wabash said last week that it would lay off 800 workers until the second quarter to cope with shriveling sales. Wabash shares were trading at $3.76 late this morning. The stock topped $17 in early 2007, held near $9 through much of this year, and then, beginning in October, suffered a steep decline.

Emmis' problems may be greater than the recession, which economists say may end next year. Some industry observers believe the radio business is in long-term decline due to competition from satellite radio and devices like Apple Inc.'s iPod.

Early this month, a Texas investor disclosed that it had doubled its stake in Emmis and wanted to discuss the direction of Emmis with managers and other investors.

The firm, Luther King Capital Management Corp., did not elaborate on why it wanted to start discussions.

Another Emmis investor, Elkhart-based Martin Capital Management, has called on Emmis to divest its assets.

Emmis owns 23 radio stations. In Indianapolis, those properties include WFNI-AM 1070, WLHK-FM 97.1, WIBC-FM 93.1. WYXB-FM 105.7, and Network Indiana.

Emmis also publishes Indianapolis Monthly and similar magazines in other cities. About 245 of the company's 1,100 workers are in Indiana, mostly at its headquarters on Monument Circle.

Emmis shares were are trading at 42 cents late this morning. It trades above $23 as recently as September 2006.

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