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Emmis Communications Corp. Message Board

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  • ScottW2000 ScottW2000 Nov 20, 2011 12:15 PM Flag

    Emmis suit

    It was disclosed earlier this week that Siegelbaum, an attorney with the law firm of
    Goodwin Procter LLP, had resigned from the Emmis board prior to the expiration of his
    one-year term. He was one of two board members nominated by the holders of Emmis
    preferred stock. At that time, Emmis released the usual statement: “The resignation was
    not due to any disagreement with Emmis on any matter relating to Emmis¶ operations,
    policies or practices.” Now, however, Emmis has filed suit against Siegelbaum in Marion
    County, Indiana Court. It alleges breach of fiduciary duty, and asks for compensatory
    and punitive damages, and "all other just and proper relief."
    The backdrop of this action is that Emmis CEO Jeff Smulyan was once partnered with Alden Global Capital in
    an attempt to take Emmis private. That cratered, and Smulyan's JS Acquisition and Alden brought legal actions
    against each other. Emmis recently reached a deal with a fund associated with Sam Zell worth $35 million, the
    purpose of which was to buy back some of its 6.25% preferred stock at attractive rates. In the Siegelbaum suit
    filed on Friday (11/18), Emmis says Alden contacted it about an offer to sell all its preferred stock (about one
    million shares) at $15 per share. That offer included understandings that Alden and Emmis would drop their legal
    claims against each other. Emmis needed board approval to consider the $15-per share offer, and set up a
    special meeting to consider it. Now Emmis alleges that Siegelbaum inappropriately disclosed the upcoming board
    meeting to Alden, and it says Alden then withdrew its offer.

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