Emmis driving off of Wall Street


JS Acquisition and Alden Global Capital are joining with Emmis Communications honcho Jeff Smulyan in taking the company private. Class A Common Stock will be acquired for $2.40 per share.

Emmis operates large market radio stations, radio groups in Eastern Europe and city/regional magazines. Its US radio markets include New York, Los Angeles, Chicago, St. Louis, Indianapolis, Austin and Terre Haute IN.

The plan calls for the acquisition of all Class A Common Stock with the exception of that already owned by JS Acquisition and Smulyan and his affiliates.

Smulyan will hold “substantially” all of the voting stock in the new entity, and JS Acquisition will be the sole owner of a new class of non-voting stock.

According to the latest 10-Q quarterly report and annual proxy that Emmis filed with the SEC, the company has 32 million Class A common shares outstanding, including 183,920 shares owned by Jeff Smulyan and his family. Smulyan also owns all of the Class B shares, of which just under five million are outstanding. Those Class B shares are worth the same as Class A, but have super-voting powers.

At the proposed $2.40 per share, RBR-TVBR calculates that JS Acquisition plans to pay $76.3 million to buy out all non-Smulyan shareholders. The value of the shares currently held by the Smulyan entities is $12.3 million, so the total equity value of the deal is just under $88.7 million.

As of the end of November 2009, the company’s last fiscal quarter reported to the sEC, Emmis had long-term debt of $339.6 million and total debt of $497.1 million.

The face value of the preferred shares at the end of February was $140.5 million. However, the proposed transaction to take Emmis private would have Alden Global Capital and other holders exchange those preferred shares for new 12% senior subordinated notes due 2017 worth 60% of the face value of the preferred shares. Thus, we calculate a value of $84.3 million.

When you add all of the debt and equity, the total value of Emmis Communications appears to be $670 million.

(Note: An earlier version of this story used share and debt totals as of the end of February 2009. This version has been updated to reflect the numbers as of the end of November 2009.)