Improved deal for Emmis preferred shareholders finally disclosed


By suing former financial partner Alden Global Capital, Jeff Smulyan’s JS Acquisition has at last disclosed how much of a better deal the Preferred Shareholders Lock-Up group held out for. And the lawsuit says Alden got a better deal as well.

The opposition of the Lock-Up Group announced on July 9th had stalled the buyout while a revised deal was negotiated to end the group’s opposition. According to the lawsuit, a revised deal was struck on or about August 5th. And while Alden has denied that it was ever committed to the revised deal, the lawsuit claims that Alden agreed to the terms on August 5th and confirmed that agreement on August 6th and August 7th.

On or about August 24th, the lawsuit states, Alden’s controlling principal, Randy Smith, informed JS Acquisition “that the precipitous drop in asset values in the radio industry made the going private transaction unattractive to Alden.” Shortly thereafter JS Acquisition announced that Alden had walked away from the deal and efforts to revive the buyout were finally abandoned on September 9th.

According to the lawsuit, the revised deal negotiated with the Lock-Up Group would have paid preferred shareholders 77.5% of the face value of their preferred stock in new high-yield notes, up from the original proposal of 60%. In return, the Lock-Up Group agreed to vote for legal changes which would clear the way for the buyout. Not only did the Lock-Up Group get a better deal, but the lawsuit claims that Alden also improved its position under the preferred stock exchange offer by $3.1 million.

While the lawsuit claims that Alden had agreed to those terms on August 5th, 6th and 7th, Alden informed JS Acquisition on or about August 20th that it had rejected the new terms. And then about four days later Smith said Alden was no longer interested in doing the buyout at all.

What’s the view from the other side of the dispute? For the first time ever RBR-TVBR actually managed to reach an Alden representative by phone. He said the company would have no comment on the litigation.