Emmis seeks to amend conversion terms, ratio for series A preferreds

By Marisa Wong

Morgantown, W.Va., Dec. 4 – Emmis Communications Corp. has agreed to submit to a vote of its shareholders an amendment to its series A non-cumulative convertible preferred stock, according to an 8-K filing with the Securities and Exchange Commission.

The company is proposing to change the voluntary conversion ratio to permit holders of the preferreds to convert their shares into class A common stock at a ratio of 2.8 shares of common stock for each share of preferred stock.

Shareholders will also vote on having all shares of preferred stock automatically convert into shares of class A common stock at a ratio of 2.8 common shares per preferred on the fifth business day after the preferreds are delisted by Nasdaq.

Under the current terms, the preferreds are voluntarily convertible into class A common shares at a ratio of 2.44 common shares for each class of preferred stock, and there is no provision of mandatory conversion.

As previously disclosed, Emmis’ preferred stock is subject to a deficiency notice from Nasdaq stating that the company has until Feb. 17 to cure its failure to meet Nasdaq’s continued listing standards. The company does not expect that failure to be cured in time and anticipates that the preferred stock will subsequently be delisted.

On Friday, Emmis entered into a settlement agreement with Corre Opportunities Fund, LP, Zazove Associates LLC, DJD Group LLLP, First Derivative Traders LP and Kevan A. Fight (collectively, the “Preferred Group”) to settle its lawsuit in the U.S. District Court for the Southern District of Indiana (Corre Opportunities Fund, LP, et al v. Emmis Communications Corp., Cause No. 1:12-cv-00491-SEB-TAB) and in the U.S. Court of Appeals for the Seventh Circuit (Corre Opportunities Fund, LP, et al v. Emmis Communications Corp., Cause No. 14-1647).

Under the settlement agreement, Corre, Zazove, DJD, First Derivative and Fight, collectively the preferred group, and Jeffrey H. Smulyan agree to vote in favor of the amendment to the series A convertible preferreds.

Emmis is an Indianapolis-based diversified media company.

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