Ion wins a round in court


Ion Media Networks announced that the Delaware Chancery Court has denied a request from some of its preferred shareholders to block the company's exchange offer and consent solicitation, which had been set to expire yesterday. But very few shares have actually been tendered for exchange. Having won in court, Ion has now extended the deadline for the exchange to Friday.

Two lawsuits had sought to block the exchange offer, the latest filed last month (6/26/07 TVBR #124), claiming it shortchanged holders of the two issues of preferred shares and improperly tried to coerce them into exchanging their preferred shares for new bonds and preferred stock with less face value. If certain thresholds are not met, NBC Universal, which owns all of a third issue of preferred stock, will be able to exchange its own preferred shares for the new bonds and jump ahead of the other preferred shareholders in Ion's capital structure.

The court's refusal to block the exchange offer clears the way for Ion to take it to closing, with the deadline extended to a minute before midnight Friday. As of the previous deadline of a minute after midnight yesterday, only 1,248 shares of Ion's 14.25% preferred stock had been tendered, out of some 56,931 outstanding. Only 1,680 shares of the 9.75% preferred shares had been tendered, out of 16,695 outstanding.

SmartMedia observation: Those low numbers could quickly change. These shares are pretty much all held by savvy institutional investors who were watching to see what would come out of the hearing in Delaware. Now that the exchange is really going to close and there is a real deadline, quite a few more may step forward to take the offer.