The outcome was never in doubt, since CEO Jeff Smulyan controls 64% of the voting power, but a special shareholders meeting was officially convened Monday (4/2) by Emmis Communications. Shareholders approved the issuance of 400,000 new preferred shares to a trust to reward employees – and set the stage for a fierce battle with other preferred shareholders.
As previously reported, the trustee of that trust is to hand the voting rights over to Emmis. That, along with the voting rights already obtained under “full value swaps” that cashed out some large preferred shareholders but kept the voting rights active, will give Emmis control of the votes of more than two-thirds of the preferred shares. Another shareholders meeting will be scheduled soon at which Emmis plans to amend the terms of the preferred shares to cut off their dividend payments. According to a critical article in the New York Times, that’s likely to drop the price of the preferred shares to about two bucks.
The vote Monday to create the trust was 53.4 million for, just under 4 million against and 3K abstaining.
The current preferred shareholders didn’t get to vote on the creation of the trust and award of 400,000 preferred shares at Monday’s meeting. They did, however, get to vote on electing a new director to the Emmis board to fill one of two seats allotted to the preferred shareholders. Easily elected was attorney Michelle Bergman of NYC-based Bergman Law LLC, who was nominated by Zazove Associates, a major holder of the preferred shares. Emmis had agreed to abstain from voting the preferred shares that it controls.
There were over 791K votes cast for Bergman, with nearly 1.5 million withheld.
