Emmis Communications announced that a judge in Indianapolis ruled Tuesday against granting a temporary restraining order (TRO) which had been sought by attorneys who brought class action lawsuits on behalf of shareholders who claim they are being shortchanged by CEO Jeff Smulyan’s bid to buy out all other shareholders at $2.40 per share.
Despite the favorable ruling on the TRO, Smulyan still faces a revolt by major holders of the preferred stock of Emmis, who have the votes to block the buyout. As it stands, August 3rd is still the target date for shareholder votes and tender offers which would take Emmis private.
Marion County Superior Court Judge Robyn Moberly ruled that the plaintiffs “failed to show a likelihood of success on the merits of any of the claims,” so she allowed the votes and tender offers to proceed.
She also said the lawyers for the plaintiffs had failed to demonstrate, as they had claimed, that Emmis was in any danger of bankruptcy, with or without the buyout transaction.
RBR-TVBR observation: Good news for Jeff Smulyan, but the war continues despite his winning this battle. Most importantly, he has to come to terms with the investors holding over a third of the company’s preferred shares. They are demanding that the deal be sweetened and they have the votes to block the required two-thirds vote of preferred shares in favor of amendments that are necessary for the going private transaction to close.