Emmis Communications has amended the terms of the “Dutch auction” it recently launched to buy back up to $6 million worth of its 6.25% Series A Cumulative Convertible Preferred Stock. It has raised the minimum price it will offer from $12.50 to $14.00, but is keeping the top end at $15.56.
The official announcement with all of the SEC-required legal verbiage:
“Emmis Communications Corporation (NASDAQ: EMMS, EMMSP) hereby announces that it has increased the minimum tender price in its modified “Dutch auction” tender offer (the “Offer”) to purchase up to $6,000,000 in value of shares of its 6.25% Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (the “Preferred Shares”). Emmis is offering to purchase its Preferred Shares at a price per share not less than $14.00 and not greater than $15.56. Tendering shareholders may continue to use the Letter of Transmittal which was previously circulated. While that Letter of Transmittal indicates that Emmis is offering to pay $12.50 to $15.56 per share, shareholders using that Letter of Transmittal will nevertheless be subject to the increased minimum of $14.00 per share. Any shares previously tendered at a price below $14.00 per share shall be deemed to have been tendered at $14.00 per share. Emmis commenced the Offer on December 1, 2011, and the Offer will expire at 5:00 p.m., New York City Time, on December 30, 2011, unless the Offer is extended.”
The preferred shares don’t trade very often, but the last trade on Nasdaq, which was December 12th, was at $15.60 – four cents above the maximum being offered by Emmis in its Dutch auction process. And that maximum hasn’t been changed. So, should a holder tender?
“Neither Emmis nor its Board of Directors is making any recommendation, or has authorized any person to make any recommendation, to any shareholder as to whether such shareholder should tender or refrain from tendering its Preferred Shares or as to the purchase price or purchase prices at which such shareholder may choose to tender its Preferred Shares. Each shareholder must make its own decision as to whether to tender its Preferred Shares and, if so, how many Preferred Shares to tender and the purchase price or purchase prices at which it will tender them,” the company said in its latest announcement.
RBR-TVBR observation: The bid and ask remain above the $15.56 maximum that Emmis is offering. The main reason for a holder to tender would appear to be that they have a large enough stake that it would be hard to sell in the limited public market for these thinly traded preferred shares. It will be interesting to see what happens when the December 30th deadline comes.