Emmis Communications had proposed to buy back $6 million of its 6.25% Series A Cumulative Convertible Preferred Stock in the “Dutch auction” tender it launched last month. But it will only be paying out less than $2.6 million, since participation fell well short of the dollar target for the maximum buyback.
According to the preliminary count by BNY Mellon Shareowner Services, the depositary of the tender offer, only 164,400 shares of the preferred issue were tendered by the December 30th deadline. That’s approximately 6.3% of the preferred shares outstanding. Emmis will pay $15.56 each – the maximum price it was offering – for a total of $2,558,064 to the selling shareholders, plus some expenses associated with the tender.
“We’ll continue to evaluate opportunities as they present themselves, but we feel very good about purchasing more than $110 million in preferred stock (including the TRS stock) for less than $29 million,” said an Emmis spokesperson in response to an inquiry from RBR-TVBR.
Several preferred shareholders had banded together to oppose the tender and locked-up their shares so they could not be tendered. They sought to make sure that Emmis could not buy back enough of the preferred shares and retire them to the point where it would hold over three-quarters of the preferred votes by virtue of the swap deal it recently cut with Alden Global Capital, whereby Emmis now holds those voting rights. The dissident shareholders fear that if Emmis acquires over two-thirds of the votes it could change the terms of the preferred issue and decrease the value of the shares.
RBR-TVBR observation: We wait to see the next move by Emmis. The company had already cut some deals with individual preferred shareholders before launching the tender.