Friday the 13th did not prove to be lucky for Emmis Communications CEO Jeff Smulyan. His attempt to take the company private was delayed yet again as he continued to negotiate with a group of preferred shareholders who want the deal terms changed – more in their favor.
For the third time, a shareholders meeting to approve legal changes necessary for the going private transaction to go through was adjourned, with the meeting now set to resume on Friday, August 20th at 6:30 pm ET in Indianapolis. The related tender offers to have Smulyan, with backing from Alden Global Capital, buy out other common shareholders for $2.40 per share and for the preferred shares to be exchanged for new bonds at 60% of face value were extended until the same date at 5:00 pm ET.
“The offers are being further extended because Emmis, JS Parent, JS Acquisition, Mr. Smulyan and certain other interested parties are continuing to negotiate in an effort to reach an agreement with a group of holders of Preferred Stock that owns approximately 38.3% of the outstanding shares of Preferred Stock in the aggregate, and who have previously advised Emmis and Mr. Smulyan that they would vote against the amendments to the terms of the Preferred Stock to be voted on at the special meeting. There can be no assurance that an agreement will be reached with the group of holders of Preferred Stock, in which case alternative structures will be explored,” Emmis said in a statement.
As of Friday, August 13th at 5:00 pm ET 20,745,196 had been tendered and not withdrawn for the common stock buyout, up slightly from a week earlier. The tally for preferred shares went down again, with only 423,203 tendered and not withdrawn as of Friday, August 13th. There are about 2.8 million of the preferred shares outstanding and a bit over 29.7 million Class A shares not already owned by Smulyan or Alden.
Smulyan’s bid to take the company private has been in the works since April. The deal would pay Class A shareholders, other than Smulyan himself, $2.40 per share, or about $76.3 million in all. As it stands, the deal would give the preferred shareholders about $84.3 million of new 12% senior subordinated notes due 2017. In all, it values Emmis at about $670 million, including debt assumption.
RBR-TVBR observation: The latest announcement didn’t repeat the line that the tenor of the talks with the preferred shareholders group was “encouraging,” but rather spoke of possible “alternative structures” for the buyout if the talks fail. If the reworked deal requires new documentation under SEC rules, we would not be surprised to see the going private closing bumped into September rather than August.