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Emmis Communications Corp. Message Board

  • thdrc2004 thdrc2004 Jun 18, 2009 6:54 AM Flag

    Priced for bankruptcy?

    The incredibly low price of Emmis preferred shares (EMMSP), which is about what is already owed in deferred dividends, implies that "the market" assumes Emmis will go under. Does anyone here (I'll post on the preferred stock board also) have any research pointing to a better outcome? If they do go under, are the back dividends considered debt or equity from a settlement perspective? If they survive, is it possible to renegotiate the terms of preferred shares and is this likely? I own and will hold a few thousand shares that I view as my most speculative holdings.

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    • There are many moving parts to this story. They just completed paying down debt by $ 78 Million. They did a great deal on one of the LA stations ,,getting $ 14 Million cash upfront and a put to sell at $ 100+ Million. They have written down the value of their stations by over $ 400 Million. The real problem here is the value of all media assets have declined..they probably couln't sell the magizens at any value today. However, the Europeon radio stations have done very well and could garner a good value above their cost..which was low. I don't think they go broke anytime soon...they have numerous options to continue. I have urged them to make some kind of any offer for this PFD and retire it at a huge discount to par value...however, longer term if there is value here...and I think there is...the PFD holders are going to make the money here. Its just a question of time...and outcome...Smylun is 60+ years old...does he want to sell and retire and how much would it all be worth ? It would be worth more than their dobt..but how much more..? Interesting question

    • Here is the prospectus for EMMSP:

      According to my limited analysis, it seems that if the company goes belly up, we're boned, as are the bond holders. A whole lot of the company assets are intangible. I figure unsecured bond holders would collect 26 cents on the dollar. Preferred holders zero.

      Founder, Jeffrey Smulyan holds a ton of Class B common stock (totals 62% of company voting stock) and would still control board, even with two added resulting from deferment of EMMSP payment for 6 quarters.

      On the other hand, bankruptcy would wipe out Jeff, so I am pretty sure he would like to avoid it.

      Right now, even News Corp, Viacom and other big media companies are barely holding their own. Add revenues have collapsed, with the economy, auto problems and the like.

      So, there is a fair chance that Emmis Communications won't make it. That reality is baked into the price. I bought a bit of preferred in a large number of companies across a wide spectrum of distressed industries. I would not recommend loading up the boat on EMMSP or any preferred trading at a nickel or dime on the dollar. But, it might not hurt to hold a little, just in case.

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