Holders of Spanish Broadcasting Series B Preferred Stock demanded that the company repurchase a large number of shares – a feat it did not come close to pulling off. The upshot is that the stockholders now have the right to add two individuals to the SBS board.
The company operates Spanish radio stations in several key Hispanic markets, and a television station in Miami, among other things.
The stockholders wanted 92,223 shares repurchased, an action which would have cost $126.9M. SBS fell short by $124.4M — it was only able to buy back 1,800 for about $2.5M.
In an SEC filing, SBS stated, “Following the occurrence, and during the continuation, of the Voting Rights Triggering Event, holders of the outstanding Series B Preferred Stock will be entitled to elect two directors to newly created positions on the Company’s board of directors, and the Company will be subject to more restrictive operating covenants, including a prohibition on the Company’s ability to incur any additional indebtedness and restrictions on the Company’s ability to pay dividends or make distributions, redeem or repurchase securities, make investments, enter into transactions with affiliates or merge or consolidate with (or sell substantially all of its assets to) any other person. The right to elect the two new directors may be exercised initially either at a special meeting of the holders of Series B Preferred Stock or at any annual meeting of the stockholders held for the purpose of electing directors.”