Following the announcement that the Board of Directors at Emmis Communications had signed off on the offer from CEO Jeff Smulyan and Alden Global Capital to take the company private at $2.40 per share, CFO Patrick Walsh fired off an email to employees assuring them that nothing will change in the way the company does business – and that Smulyan will still be running the show after the buyout closes.
As filed with the SEC, here is a communication issued by Emmis Communications Corporation on May 26, 2010 to its employees.
From: Patrick Walsh
Sent: Wed 5/26/2010 4:25 AM
To: Emmis Domestic Announcements
Subject: Go-Private Transactions
Last evening, Emmis Communications and CEO Jeff Smulyan (through JS Acquisition which was formed for the purpose of completing the go-private transactions) announced plans to formalize the $2.40 per share offer to purchase Emmis’ Class A common stock and the offer to exchange Emmis’ preferred stock into debt. Earlier this week, Jeff and his investment partner, Alden Global Capital, signed a definitive agreement for Alden to provide the required financing for the go-private transactions. Jeff would ordinarily communicate this important information to you, but given his direct involvement in the transactions, I am pinch hitting for Jeff.
Yesterday’s announcement is the next step in the process Jeff and Alden announced on April 26, 2010. I wanted to send you this brief update because I’m certain you will read more about the go-private transactions in various industry trades in the coming days.
Alden Global Capital is a large, multi-billion dollar investment firm with interests in many companies in various industries, including media. If the proposed transactions are completed, Jeff will be the majority shareholder, Chairman and CEO of privately-held Emmis and while Alden will have certain rights as a minority shareholder under the proposed transactions, they will not be involved in the day-to-day operations of Emmis. The transaction should not result in changes to how we operate the business.
If you own Emmis common or preferred shares, you’ll receive more information in the mail on the proposed transactions in the coming days including instructions on how to tender your shares. In the event all the proposed transactions are completed, there are several items that will be of interest to employees:
1. If you hold unvested Emmis stock options with an exercise price less than $2.40, the vesting of these options will accelerate and at closing the options will be cashed out at $2.40 less your exercise prices less applicable tax withholding.
2. If you have unvested restricted stock or unvested restricted stock units, the vesting of these shares or units will accelerate and at closing the shares or units will be cashed out at $2.40 less applicable tax withholding.
3. If you hold vested or unvested Emmis stock options with an exercise price of $2.40 or more, these out-of-the-money stock options will be cancelled.
4. If you own Emmis common shares including shares in the 401k plan, shares held by brokers like Merrill Lynch, or shares held in certificate form, these shares, if tendered, will be cashed out at $2.40 at the completion of the tender offer. If you do not tender, your owned shares will be cashed out at $2.40 at closing.
Successful completion of the go-private transactions is estimated to take three months. During this process and after the process concludes, regardless of the outcome, our work is unchanged: execute our strategy, hit our budgets and key metrics, and deliver for our listeners, readers and advertisers. In other words, we will keep you updated, but stay focused on what matters most in this important rebuilding year for Emmis.
If you are contacted by a shareholder or member of the media, please direct inquiries to me. Let me know if you have questions.
Patrick M. Walsh
EVP, Chief Operating Officer and Chief Financial Officer