Emmis Communications scraps exchange offer for 6.25% convertibles

By Angela McDaniels

Tacoma, Wash., Sept. 9 - Emmis Communications Corp. terminated the exchange offer for its 6.25% series A cumulative convertible preferred stock, according to a company news release.

The company was offering $30 principal amount of 12% pay-in-kind senior subordinated notes due 2017 for each $50 liquidation preference of convertibles. No accumulated dividends were to be paid.

The exchange offer was conditioned on, among other things, obtaining approval from holders of two-thirds of the outstanding convertibles to amend some of the terms of the convertibles at a special meeting, which began on Sept. 8 and was adjourned to 8:30 a.m. ET on Sept. 9. This condition was not met.

This was also a condition to the tender offer by JS Acquisition, Inc. and JS Acquisition, LLC for Emmis' class A common stock, so that offer was also terminated.

The JS Acquisition companies are owned by Emmis chairman, chief executive officer and president Jeffrey H. Smulyan. They were offering $2.40 per share.

The amendments would have:

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

• Provided for the automatic conversion of any convertibles 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 convertibles were convertible immediately prior to the merger; and

• Eliminated the right of the convertibles holders to nominate directors to Emmis' board.

In addition to the amendments becoming effective, the exchange offer was conditioned on 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.

As of 5 p.m. ET on Sept. 8, 418,503 convertibles and 19,968,517 class A shares had been tendered into the offers and not withdrawn.

The exchange offer began July 6. The expiration date was originally scheduled for Aug. 3 and was delayed multiple times, most recently to 5 p.m. ET on Sept. 8.

Emmis said that the offer was extended because the company, the JS Acquisition companies and Smulyan were still in negotiations with a group that holds 38.3% of the convertibles - the group members previously said they would vote against the amendments to the terms of the convertibles at the special meeting - and Alden Global Capital, a private asset management company that had previously agreed to provide financing for the tender offer through an affiliate.

During the past several weeks, the parties negotiated and agreed in principle on revised terms for the offers, but Alden subsequently said it would no longer support the negotiated terms, according to a previous news release.

Emmis believed it unlikely that an agreement would be reached.

The information agent was 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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