After a rocky road with investor Alden Global Capital—and just days after suing board member Joseph Siegelbaum for leaking confidential information–Emmis reached a deal to repurchase more than one million shares of preferred stock from Alden Global for $16.3 million. Emmis is paying $15.75 for each share. Last month, it had struck a deal to buy Alden’s preferred stock for $15 a share.
Emmis sued Siegelbaum 11/18, two days after Siegelbaum resigned from the board. As a result of the new deal, Emmis is dropping that suit as well as a suit it filed against Alden over its decision last fall to back out of a deal that would have taken Emmis private.
“I’m pleased we were able to come to terms with Alden, bringing an end to this difficult relationship between Emmis and our largerest preferred shareholder,” Emmis CEO Jeff Smulyan said in a statement. “This is an important milestone for Emmis.”
Emmis also announced 11/11 it planned to repurchase tens of millions of dollars of its preferred stock from various investors at a huge discount. This, to get some financial breathing room. Before the repurchases began, the company had about $140 million in preferred stock outstanding. However, those shares were trading for just $42 million.
To finance the preferred stock purchases, Emmis is borrowing up to $35 million from Zell Credit Opportunities Fund, an affiliate of Tribune Chairman and financier Sam Zell. When the repurchases from Alden are complete, Emmis will have drawn down $28.5 million of Zell’s $35 million.