Will third time be the charm for Emmis vote?


Once again shareholders of Emmis Communications are supposed to gather at 6:30 pm Friday (8/13) in Indianapolis to vote on amendments to clear the way for CEO Jeff Smulyan to buy out other shareholders and take the company private. The meeting has been adjourned twice while Smulyan negotiates with a group of preferred shareholders. Wall Street is waiting to see if an agreement has been reached.

The Preferred Shareholders Lock-Up Group holds over 38% of Emmis’ preferred shares, so they are able to prevent the required two-thirds vote of preferred shares necessary to change the terms of the preferred issue so the going-private transactions can go to closing. The current deal that they object to would pay them 60% of face value of the preferred shares in new bonds. What they are holding out for has never been publicly disclosed.

With Smulyan locked in a standoff with the preferred group, Emmis has twice postponed the shareholders vote due to the lack of a quorum. Tender offers for the company’s Class A common stock, at $2.40 per share, and for the preferred exchange have also been extended to Friday the 13th at 5:00 pm.

Whether any of those scheduled events will actually take place on Friday is still up in the air. As of yet there has been no announcement of a deal with the preferred holders and no SEC filings since August 9th.

RBR-TVBR observation: We note that Richard Morgan of TheDeal.com has looked at the situation and issued the same warning that we had mentioned earlier – that the preferred shareholders might overplay their hand. He notes that Smulyan walked away from a buyout deal once before and could well do so again. Click here to read Morgan’s story.