Emmis Communications is threatening litigation over Alden Global Capital’s refusal to fund the re-negotiated terms of the company buyout by founder and CEO Jeff Smulyan. The going private effort was officially called off Thursday morning (9/9) after weeks of negotiations and a special shareholders meeting that was adjourned nine times without taking a vote.
Both Emmis and Smulyan’s JS Acquisition issued press releases Thursday morning officially terminating their respective tender offers for the company’s preferred shares (a proposed swap for new high-yield bonds) and Class A common shares (at $2.40 cash each).
But Emmis also sent a separate statement to RBR-TVBR holding Alden accountable for the failed buyout and threatening legal action for damages:
“Last month, Emmis Communications (Nasdaq: EMMS) and Alden Global Capital agreed, subject to completion of definitive documentation, to terms that would allow a group of preferred shareholders that previously did not support the exchange offer and amendments to agree to support the transaction. It should be noted that Alden Global Capital was a willing and active participant in the negotiations and materially improved the terms of their proposed investment.
Shortly after negotiating terms with the preferred shareholders, and after working closely with Emmis for the last five months, Alden Global Capital informed interested parties that they did not want to provide financing for the transactions and would not support the re-negotiated terms with the group of preferred shareholders to which Alden had committed.
Despite several weeks of continuing talks, Alden refuses to honor the commitment they made.
All parties to the negotiation are stunned and saddened by Alden’s decision to not honor the negotiated deal. Emmis, JS Acquisition, and Jeff Smulyan will explore various legal remedies related to damages caused by Alden’s actions.
Emmis will continue as a public company and appreciates the overwhelming support of its common shareholders during this lengthy process. Emmis has taken important actions this fiscal year to generate revenue and cash flow growth and looks forward to working closely with its shareholders and employees to increase the value of the company as the radio and city/regional magazine industries continue to see improved operating results.”