I believe the common holders have the refuge of seeking court based appraisal for their shares, in any going private transaction. I don't know, but it is possible the preferred holders would have that option as well, if they were compelled to convert to some other instrument. It's confusing, because in the going private proposal from last year, preferred holders who didn't take the exchange offer, of new debt for old, were going to end up being "converted," and then paid like $5.80 a share for their preferred. You need to keep in mind that there are conversion clauses in the original indenture for the preferred, that were written when Emmis's stock was trading at like $60 a share. That indenture is now extremely disadvantageous to the preferred holders. And that's really the issue we are dealing with here. If the legal language of the indenture allows Emmis to eliminate the preferred at the lowest cost possible, doesn't it have an obligation to its common shareholders, both moral and fiduciarily, to seek to do that....while obviously remaining within the law of the preferred indenture? That's why I say there's an inherent conflict of interest between the preferred and common holders. No doubt about it. But I guess that is probably true, in theory, ALL the time, between debt and equity holders. It's just that the indenture for the preferred, as written, allows for a whole host of things to be done, that one wouldn't normally expect to be done...if 2/3 of the preferred shareholders get together and go for it.
I can't imagine that the original people putting the legal documents together didn't figure that Emmis could, in the future, tender for the preferred, and effectively be in a position to "retire" it, if they got control of, and or the support of, say, 2/3 of the preferred holders.
I could be wrong, but I think this is likely to be an "orphan" or "dying" security. Which is, like you, why I sold out last week. But shares that are "sold out" are not going to help Emmis, unless they are going into "friendly" hands. I'm personally surprised there isn't a higher "top price" in the tender offer. I think they're pussyfooting around here, and adding an uncomfortable level of risk that they don't achieve what they are seeking. As it stands now, the market appears to be saying that it is willing to step ahead of management and "suck up" any shares of preferred that are available.