Emmis Communications begins exchange offer for 6.25% convertibles

By Angela McDaniels

Tacoma, Wash., July 6 - Emmis Communications Corp. is offering to issue 12% pay-in-kind senior subordinated notes due 2017 in exchange for any and all of its 6.25% series A cumulative convertible preferred stock, according to a company news release.

The exchange offer is required under the company's merger agreement with JS Acquisition, LLC, a company formed by Emmis chairman and chief executive officer Jeffrey H. Smulyan to take the company private. The financing for the transaction will be provided by an affiliate of Alden Global Capital.

The company announced plans for the exchange offer in a schedule TO filed with the Securities and Exchange Commission in April.

Holders who exchange will receive $30 principal amount of notes for each $50 liquidation preference of preferreds. No accumulated dividends will be paid.

The new notes will be callable at par at any time.

The exchange offer will expire at 5 p.m. ET on Aug. 3.

Exchanging holders are required to vote in favor of amendments to the terms of the preferreds that will:

• Eliminate the rights of the preferred holders to require Emmis to redeem all or a portion of their shares on the first anniversary of certain going-private transactions;

• Provide for the automatic conversion of any preferreds not exchanged upon the merger into $5.856, the amount that would be paid to holders of the class A common stock into which the preferreds were convertible immediately prior to the merger; and

• Eliminate the right of the preferred holders to nominate directors to Emmis' board.

For the amendments to be effective, they must receive the vote of holders of two-thirds of the outstanding preferreds at a special shareholder meeting on Aug. 3 in Indianapolis.

Alden, which holds 41.4% of the preferreds, has agreed to vote in favor of the amendments and exchange its preferreds for notes.

The exchange offer will be conditioned on the receipt of consents from holders of two-thirds of the outstanding preferreds, the affirmative vote of more shares of class A common stock and class B common stock in favor than against each of the proposed amendments and at least 32.8% of the outstanding class A shares being tendered in JS Acquisition's tender offer, which also expires on Aug. 3.

The information agent is BNY Mellon Shareowner Services (866 301-0524 or 201 680-6579).

Emmis is an Indianapolis-based diversified media company principally focused on radio broadcasting.

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