Emmis Communications has put going private on hold for another week as founder, CEO and would be sole owner Jeff Smulyan continues to negotiate with holders of more than a third of the company’s preferred shares. Their demands for a better deal have blocked passage of amendments necessary for the buyout which would take Emmis private to go to closing.
In a repeat of Tuesday’s (8/3) scenario, Friday’s (8/6) scheduled shareholders vote was adjourned to a future date due to lack of a quorum. The new date is Friday, August 13th.
The company sent RBR-TVBR this brief statement on Saturday:
“We did not have a quorum for the shareholders’ meeting yesterday (8/6) and have determined to adjourn the meeting until 6:30 pm on Friday, August 13. We expect the Tender Offer for the Common Stock and the Exchange Offer for the Preferred Stock will be similarly extended. However, those decisions will be made over the weekend and formal announcements one way or the other will be made before the market opens on Monday. In the mean time, we continue to engage in discussions with the Preferred Shareholder Lock Up Group in an effort to gain their support for the proposed transactions. The tenor of these talks has been encouraging, but obviously we cannot make any assurances that they will be successful.”
The Preferred Shareholder Lock Up Group is able to block the going private closing because they hold over one-third of Emmis’ preferred shares. Approval of the amendments to the terms of the preferred issue necessary to take Emmis private requires a two-thirds “yes” vote and the Lock Up Group has vowed to vote “no” as the deal stands, which would have the preferred shares exchanged for new bonds at 60% of face value.
Smulyan’s bid to take the company private, which dates back to April, values Emmis at about $670 million, including debt assumption. He is backed by Alden Global Capital. The deal would pay Class A shareholders, other than Smulyan himself, $2.40 per share, or about $76.3 million in all. As it stands, the deal would give the preferred shareholders about $84.3 million of new 12% senior subordinated notes due 2017.
RBR-TVBR observation: Although the overwhelming majority of Class A shareholders have tendered their shares for the $2.40 cash buyout, it’s not really surprising that the company has been unable to muster a quorum for the special shareholders meeting. Most holders are likely waiting to see the final package, including the terms that Smulyan is able to reach with the dissident preferred holders, before voting on the amendments to make the buyout possible.
