Emmis cuts conversion price on preferreds to $30.10

New York, June 17 - Emmis Communications Corp. said it lowered the conversion price on its 6.25% series A cumulative convertible preferred stock to $30.10 form $39.0625.

The announcement follows completion of the company's Dutch auction tender offer for its stock, which saw 24.28 million shares submitted for purchase at prices at or below $19.50 per share.

Emmis will buy 20.25 million of those shares, the maximum size of the offer.

The price was near the top end of the range of $17.25 to $19.75.

Emmis had previously said that if the tender was fully subscribed at the top end of the price range, the conversion price would have been lowered to $30.00.

The reduction in the conversion price was in line with a settlement, announced June 2, to end a lawsuit filed by holders of the convertibles.

The level was set using a "special anti-dilution formula."

In addition, any other tender or exchange offers will also trigger an anti-dilution adjustment based on the amount to be paid in the tender or exchange, Emmis' overall market capitalization and the market value of the class A common stock over a 10-day trading period ending on the date immediately before the first public announcement of the offer.

In addition to the adjustment to the conversion price, Emmis is giving holders of the convertible preferreds the right to require Emmis to redeem all or part of the securities on the first anniversary of a going private transaction in which Jeffrey H. Smulyan, Emmis' largest shareholder, or his affiliates participate. The redemption price would be the liquidation preference plus accrued dividends.

Announcing the settlement, the Indianapolis broadcaster said it had entered into agreements with investors owning more than 66 2/3% of the convertibles.

The lawsuit was over the anti-dilution provisions of the securities.

Agreement allows Emmis to go ahead with its planned Dutch auction tender offer for its common stock.

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