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Emmis Communications Corp. Message Board

  • ScottW2000 ScottW2000 Sep 23, 2010 5:42 PM Flag

    Time for some real news w/out the P&D

    Smulyan Comments On Alden-Emmis Deal Collapse
    September 23, 2010

    Emmis' Jeff Smulyan briefly commented on the collapse of his deal with Alden Global Capital to take Emmis private, saying the company "just disappeared." In a New York Times article about Alden head Randall Smith, who is expected to bid on Philadelphia's Inquirer and Daily News, Smulyan is quoted about Alden's failed plans to back his JS Acquisition.

    Smulyan told the Times that Alden and Smith " had a vision for media — not a fully formed vision, but they said they had a big interest in the industry." However, after Alden backed out of Smulyan's deal for the privatization of Emmis, "They just disappeared." Smulyan says he and the company spent tens of millions of dollars in fees, including agreeing to pay Alden a special $10 million fee for cutting a deal with holdout shareholders. He added, "It’s like Randy Smith woke up one day and said, ‘We don’t like this sector; kill the deal.’"

    Earlier this month, Smulyan filed a lawsuit against Alden Global, claiming the company breached their agreement. Smulyan is seeking unspecified damages, in addition to other fees and expenses. "We entered into an agreement with Alden, believing them to be fair and trustworthy individuals," he said in a statement. "What we experienced was far different."

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    • ALDEN GLOBAL CAPITAL is among the group of senior lenders once again winning the auction to buy the company that publishes the PHILADELPHIA INQUIRER and PHILADELPHIA DAILY NEWS and their website PHILLY.COM. PHILADELPHIA MEDIA NETWORK INC., the company formed by ALDEN, ANGELO GORDON AND CO., and CREDIT SUISSE bid $105 million in cash for the operation, the same bid that won the first auction of the bankrupt company in APRIL.
      The bid beat out a partnership of investor RAYMOND G. PERELMAN and the CARPENTERS' UNION pension fund for the papers. The lenders were unable to reach agreement with one of the paper's unions, the drivers' union represented by the TEAMSTERS, after the first auction, leading to the second auction THURSDAY.
      ALDEN is in the news in the radio business for pulling out of JEFF SMULYAN's bid to take EMMIS COMMUNICATIONS private, prompting SMULYAN's lawsuit against ALDEN.

      • 1 Reply to ScottW2000
      • According to a legal complaint filed last week in Indiana Superior Court, the equity partner that pulled out of an agreement that would have had CEO Jeff Smulyan’s JS Acquisition buying regional magazine publisher and radio broadcaster Emmis Communications Corp. did so because of a drop in asset values across the radio industry.

        The five-page complaint indicates that JS Acquisition entered into a Securities Purchase Agreement with Alden Global Capital on May 24. Under terms of the agreement, Alden was to help finance JS Acquisition’s $90.2 million offer to buy Emmis’ roughly 37.6 million outstanding shares of Class A common stock and to take the company private. But as JS Acquisition and Alden spent the next several weeks negotiating with a group of stockholders that indicated it would vote against certain amendments to the terms of the agreement, the common stock of other publicly traded radio broadcasting companies “plummeted.”

        The complaint says that on August 6 and again on August 7 Alden confirmed the new terms of the agreement (an increase of the new notes from 60 percent to 77.5 percent of the face value of the preferred stock and a $3.1 million increase in the original issue discount applied to Alden’s original investment agreement) and that the holdout group also subsequently approved. However, by August 20, Alden informed JS Acquisition that it was rejecting the new terms and later said the transaction was made “unattractive” by the “precipitous drop in asset values in the radio industry.”

        Filed on September 15, the complaint alleges breach of contract by Alden Global. "We entered into an agreement with Alden, believing them to be fair and trustworthy individuals,” Smulyan says in a statement. “What we experienced was far different. No one should suffer the same fate at Alden's hands."

        A representative from Alden did not immediately return a request seeking comment.

    • Smulyan: Alden Claimed 'Big Interest In The Industry'
      September 23, 2010: The New York Times does a writeup on Alden Global Capital principal Randall Smith, whose hedge fund is now being sued by Emmis Communications Chairman/CEO Jeff Smulyan over its decision to withdraw from an agreement to help finance the now-defunct Emmis go-private transaction.

      The paper says Smith is "quietly building a fledgling media empire," investing millions in newspaper and broadcast, but adds that "his exact ambitions are unclear."

      Smith is expected to be among those bidding on the Philadelphia Inquirer this week and Alden is in a group now in control of the Orange County Register. And Smith, the paper reports, "also snapped up debt securities of Emmis Communications, a troubled radio broadcasting company."

      Alden was part of the go-private transaction from when it was announced, financing the tender offer for common stock, but earlier this month withdrew its support for the transaction after negotiations with a preferred shareholders' group delayed a vote on the terms of an exchange of preferred stock for notes several times.

      The paper writes, "Not everyone is happy with the way Mr. Smith has handled some of his deals. [Smulyan] sued Mr. Smith's firm last week, claiming he had backed out of an agreement to help take the company private."

      Smulyan told the Times about Alden, "They had a vision for media -- not a fully formed vision, but they said they had a big interest in the industry."

      Alden, which hasn't responded to the lawsuit, declined to comment to the paper.

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