And they appear to be carrying NO DEBT, net of cash per share.
Could they take on $110 M (US) in debt, bring total equity up to around $200 M (again US), and not be considered to be too leveraged? I guess it depends on what kind of interest rate they'd have to pay to borrow $110 M. But I would imagine, if the financial results keep improving as strongly as they have been, if the founding family were to personally guarantee a borrowing, I would think the rate could be very low.
I hadn't realized just how much things were improving at Grupo Radio Centro. (This, of course, is the company that is committed to [eventually] buy EMMS's LA station for $110 million.)
In http://sec.gov/Archives/edgar/data/906526/000114420411036791/v226493_20f.htm are:
"In April 2009, we began to provide programming to, and sell advertising time on, KXOS-FM, a radio station broadcasting in Los Angeles, California that is owned by Emmis Communications Corporation. Our investment in the United States involves risks to which we have not previously been exposed and presents different or greater risks, including from competition and regulation, than those present in Mexico. Our potential for success should be considered in light of the expenses, complications and delays frequently encountered in connection with a new business. In 2010, our U.S. operations generated an operating loss of Ps. 106.8 million. We cannot predict whether or when our operations in the United States will become profitable."
Have KXOS-FM results improved since then?
"On May 13, 2009, certain members of the Aguirre family acquired a 49% equity stake in Grupo Radio Centro LA, LLC, a wholly-owned subsidiary of the Company formed to provide programming to KXOS-FM pursuant to the local marketing agreement with Emmis Communications Corporation. In exchange for their 49% equity stake, the Aguirre family members agreed to be responsible for 49% of the cost of the Company’s investment. On February 26, 2010, the Company undertook a capital reduction of Grupo Radio Centro LA, LLC by returning U.S.$ 1.47 million in capital contributions to certain members of the Aguirre family, which was the same amount initially invested by them. As a result of the capital reduction, the Company is the sole shareholder of Grupo Radio Centro LA, LLC."
considering how 2010 KXOS-FM results turned out, a wise move on the family's part
IMO GRC would not be greatly motivated to exercise the call--paying $110M to relieve itself of paying $7M per year--any sooner than necessary.
When (not "if"--I am making an assumption) Emmis exercises the put, will GRC perform?
I just don't see it with him having the controlling vote if they get control of the pfd's. And please don't give me the line of him not wanting to shaft himself since he owns the A common.
The other interesting thing is the claim that the pfd owners wanted liquidity which is why they made the tender, and yet the board member appointed by the pfd's was the one to vote against the tender.
Certainly not me. The white flag has been waved to Zazaove & Co., at this point, as far as I'm concerned. They're probably buying up every single share of pfd, at this point, to "guarantee" EMMS does get to 66 2/3%.
Good to hear in the conf call that EMMS is talking to them; they need to be.
Hey LTF - Thanks for asking Jeff about the Merlin-Grupo news article on the CC yesterday.
Smulyan said that Grupo was free to sell or transfer its LMA and rights to buy the LA Emmis property (for $110MM) to anyone. You confirmed this with Emmis on the CC.
Reading between the lines, I would say that Emmis is eager to receive the $110MM for its LA property, reduce debt and bring the share price above $1. They have a great relationship with Merlin. Perhaps, they would be only too happy to see the LA property transferred from Grupo to Merlin.