Emmis launching Dutch auction for preferred shares


Having cut a deal to buy back the largest block of its preferred stock from Alden Global Capital, Emmis Communications is now offering to buy back shares from some of the remaining preferred holders. And it’s using an approach it’s used before to buy back securities – a “Dutch auction.”

Under the modified Dutch auction tender offer Emmis will purchase up to $6,000,000 in value of shares of its 6.25% Series A Cumulative Convertible Preferred Stock at a price per share not less than $12.50 and not greater than $15.56. (The deal with Alden was at $15.75.)

The tender offer will commence on November 30, 2011, and will expire at 5:00 pm, New York City Time, on December 30, 2011, unless the offer is extended.  Depending on the final purchase price of the offer, if the offer is fully subscribed, Emmis could purchase between 385,604 and 480,000 Preferred Shares representing 14.8% to 18.4% of the issued and outstanding Preferred Shares as of November 30, 2011.

A modified Dutch auction tender offer allows shareholders to indicate how many shares and at what price(s) they wish to tender their shares within the specified share price range.  Based on the number of preferred shares tendered and the prices specified by the tendering shareholders, Emmis will determine the lowest price per share that will enable it to purchase up to $6,000,000 of preferred shares at such price, or a lower amount depending on the number of shares that are properly tendered and not properly withdrawn. All shareholders will be paid the same price for their preferred shares.

The preferred share purchases will be funded by the deal that Emmis recently cut with Sam Zell’s Zell Credit Opportunities Master Fund LP.

RBR-TVBR observation: Anyone who wanted to sell their Emmis preferred shares could have done so on the open market Wednesday (11/30) for $15.60 or a few cents more. That would seem to make it questionable whether there will be any rush to take Emmis up on this offer capped at $15.56.