One can get a sense of the potential legal theory of where the lockup group might go. This filer argues that the shares that EMMS bought, under the swap agreements "may not" be appropriately considered to be outstanding. It further states "We decided to join the lock-up group because we were outraged that the Issuer was was suggesting that it will try to eliminate the cumulative rights of the Preferred Shares thereby all but making these preferred shares worthless. This threat by the Issuer to strip the Preferred Shares of their cumulative rights undermines both the spirit and letter of corporate governance laws and practices."
I have to agree with the sentiment of outrage and really wonder how someone who violates so outrageously in my opinion the spirit of the law (if not the letter) in dealing with the pfd will address the matter of how much to pay for the common should he decide to take the company private.
Come on, let us acknowledge that Emmis is not exactly SWIMMING in money. They have to do what it takes to improve the balance sheet. Emmis offered around $15.50 for the preferreds under the swap arrangement. I do not think that is a terribly bad price for the preferreds.
Were these people (or the holders at that time) sufficiently outraged when the preferreds traded in the single digits between Oct. 2008 and Sep. 2009? Are they harboring any false impressions that they will get full face value?