What now for Emmis?


RBR-TVBR analysis
Emmis Communications faces a February 2012 deadline to get its stock price back above a buck or Nasdaq will begin delisting proceedings. But that’s down the road and right now CEO Jeff Smulyan has more pressing business to attend to.

Contrary to what you may have read elsewhere, Emmis did not face a September 1st covenant deadline on its senior debt. That had been eliminated back in March when it got consent from its lenders and amended its credit agreement. That involved reworking the terms of $182.9 million of debt held by Canyon Capital Advisors. The terms were loosened, but Emmis is now paying hefty interest charges on that debt.

So job one right now for Smulyan is refinancing Emmis’ debt. Last week’s closing of the sale of three New York and Chicago FMs to Merlin Media put $120 million of cash into Emmis’ coffers, which allowed it to pay down 38% of its senior debt. “If I could have done it without selling anything I would have, but I couldn’t get there,” Smulyan told RBR-TVBR in June. (Click here to see the story and listen to the audio interview with Smulyan.)

Smulyan noted that the deal with Canyon gave Emmis a couple of years to get its refinancing done, but he’d rather do it sooner than later since rates have been attractive.

As for the stock price issue with Nasdaq, Emmis has two choices – and will probably elect both, since they can run consecutively. First, it can wait to see if the stock price goes back up. Factors that could make that happen would be getting the refinancing done and/or reporting a couple of good quarters of growth. Second, and only if the previous scenario doesn’t materialize, Emmis can ask shareholders to approve a reverse stock split. That’s the worst-case scenario, but would maintain the stock listing.

That doesn’t have to be dealt with right away, though. So the remainder of 2011 can be focused on doing a refi and Nasdaq can be put off to 2012.