The stock price for Emmis Communications is holding steady ahead of the adjourned shareholders meeting scheduled to reconvene Friday evening. There’s been no announcement of any settlement with the preferred shareholders, but also no postponement.
At noon Emmis Class A common stock was trading at $2.07, up a penny from Thursday’s close, but still well below the $2.40 that founder and CEO Jeff Smulyan has offered to pay to take the company private. As previously reported, the overwhelming majority of Class A shares had been tendered for the offer now scheduled to expire at 5:00 pm ET Friday, having been extended from Tuesday.
But that tender for the Class A shares can’t go to closing unless Smulyan has tied up the legal niceties to take the company private. Holders of more than a third of the company’s preferred shares have vowed to vote against those legal changes unless they get a better deal. So, Smulyan either has to get them onboard or figure out a way to go forward without having the preferred holders vote. A statement issued this week said he was looking at the possibility of leaving the preferred stock in place as the company goes private. The problem, though, appears to be that you would have preferred shares that are convertible into a common stock that no longer exists. How would that be resolved?
2.07 is not that far from 2.40, 15% or so. If the deal gets done, there is a 15% gain, if not, the downside unknown but probably much larger than 15%. This stock is so thinly traded that if one is not careful, they could get hurt badly. Probably going to see some selling into the close.
and most importantly, I should have noted that if the deal gets done the buyout is 2.40, but that could take time, and during that time you could see a drop and holders grow impatient and fearful that it may fall through.