Alden still 3rd largest Emmis stakeholder


Even as Alden Global Capital continues to battle in various courts with Emmis Communications and Emmis CEO Jeff Smulyan over last year’s aborted going private deal, Alden remains a large holder of Emmis’ preferred stock. That makes it still the third-largest stakeholder in the company.

Smulyan himself is the biggest shareholder, with 5.89 million super-voting Class B shares and Class A shares and options which total more than 200K shares. In all, he has 63.9% of the voting power at Emmis. Only two institutional investors are listed as holding 5% or more of Emmis’ stock for the annual shareholders meeting set for July 13th. AQR Capital Management owns more than 2.85 million shares, or 8.5% of the Class A shares and 3.5% of total voting power.

Alden, while it sold its Class A shares after walking on the buyout, still holds over 1.16 million shares of the 6.25% Series A Preferred Stock, which is convertible into 2.84 million Class A common shares, or 7.8% of the Class A shares and a 3.4% total voting stake.

Those preferred shares have not be converted, nor are they likely to be, so Alden is eligible to vote for two new members of the Emmis board of directors to be elected by the preferred shareholders, since the company has not declared a dividend on the preferred stock for six straight quarters. And while Alden owns over 40% of the preferred shares, it has not nominated any candidates for those two seats, which will expand the Emmis board to 12 members.

Rather, both have been nominated by Zazove Associates, a general partner of  Zazove Aggressive Growth Fund, which is a holder of an unspecified number of preferred shares. Nominee David Gale is President of Delta Dividend Group, a San Francisco-based investment management firm. Also nominated by Zazove is Joseph Siegelbaum, Senior Partner in the Business Law Department of New York law firm Goodwin Procter LLP.

With no competing candidates, it is assumed the two will be elected by the preferred shareholders and join the Emmis board. Holders of the common shares will vote on whether to reelect consultant and former textile mogul Richard Leventhal, former CBS Television and DirecTV CEO Peter Lund and investment firm manager Lawrence Sorrell. They are also unopposed for those three seats.

RBR-TVBR observation: Normally there’s not much reason to be interested in the vote tallies for uncontested board elections. Each nominee needs only a single vote to win. However, we will be interested to see the vote for the two seats being elected by the preferred shareholders. Will Alden vote yes, withhold or abstain?

Perhaps more importantly, will it show up at all or send its proxy? A majority of the preferred shares are required for a quorum and Alden owns 1,162,737 of the 2,809,170 outstanding. That’s probably not going to be a problem, since the preferred shares are overwhelmingly held by institutional investors who are not likely to neglect sending their proxy.