Once Emmis controls enough preferred votes, the preferred shareholders will vote for some deal in which each preferred share is converted into a 200-year note for 3 cents at 0.25% annual interest--or something like that.
Well, you are probably right, that there probably is no further gain, in being a preferred holder, beyond the current trading price (without a fight)...but I do not believe they would be able to act nearly as "adversarially" towards the pfd. stock as you are indicating. (Of course, I could be wrong.)
The following is an excerpt from their SEC filings on the tender offer:
If we are able to direct the vote of at least 662/3% of the outstanding Preferred Shares after the completion of the Offer, we may amend certain terms of the Preferred Shares.
Assuming that $6,000,000 of Preferred Shares are purchased in the Offer at a Final Purchase Price of $15.56 per share, the 1,484,679 Preferred Shares whose vote we are currently able to direct pursuant to agreements we entered into previously with holders of those shares will constitute 66.673% of the issued and outstanding Preferred Shares following the completion of the Offer. We do not intend to cause these Preferred Shares to be tendered in the Offer.
Following the completion of the Offer, we may continue to engage in discussions and negotiations with holders of Preferred Shares with respect to, among other things, acquiring their Preferred Shares or entering into voting or other arrangements with such holders. Although our Board of Directors has not made any determinations with respect to making amendments to the terms of the Preferred Shares, if we are able to obtain the ability to direct the vote of at least 662/3% of the issued and outstanding Preferred Shares following the completion of the Offer, we may elect to, among other things, amend various provisions applicable to the Preferred Shares, including but not limited to: (i) reducing or eliminating the liquidation preference of the Preferred Shares, (ii) removing the ability of the holders of Preferred Shares to require the Company to repurchase all or any portion of such holders’ Preferred Shares upon a change of control or certain going-private transactions, (iii) removing the Company’s obligation to pay to holders of Preferred Shares the amount of dividends in respect of their Preferred Shares that are currently accrued and unpaid, (iv) changing the designation of the Preferred Shares from “Cumulative” to “Non-Cumulative” such that dividends or distributions on the Preferred Shares shall cease to accrue, (v) eliminating the rights of the holders of Preferred Shares to nominate directors to the Company’s Board of Directors as a result of arrearages in dividends, and (vi) eliminating the restrictions on the Company’s ability to pay dividends or make distributions on its Common Shares prior to paying accrued and unpaid dividends or distributions on Preferred Shares. If the above-described amendments are made, the market value of the Preferred Shares remaining outstanding may be materially and adversely affected, and we may engage in various actions that are currently prohibited or limited by the various provisions of the Preferred Shares. See Section 2 (“Purpose of the Offer; Certain Effects of the Offer”), Section 9 (“Source and Amount of Funds”) and Section 12 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares of the Company”).
If the above-described amendments are made, the market value of the Preferred Shares remaining outstanding may be materially and adversely affected, and we may engage in various actions that are currently prohibited or limited by the various provisions of the Preferred Shares.
The likelihood (IMO) that Emmis, upon controlling at least 2/3 of the preferred vote, will ram through some deal that is really, really bad for the remaining preferred shareholders convinced me to take $15.60/share and RUN. The very language you quoted is IMO a warning that this is going to happen. I think that it really will be that bad for remaining preferred shareholders. Is this "fair" IMO? No, but if it's legal, I guess it's OK from the point of view of Emmis. I think that there's a moral compass missing somewhere and that should the interests of some party intending to acquire Emmis diverge from those of the common stockholders, it's going to be "uh-oh!" time for them.