You're worse than him with your meaningless posts. Is anything related to this stock posted in this board? Looks like a child's sandbox. Let's discuss the market or I'm looking for a new place to post.
Who the hell are you & what do you bring to this board? What a stupid comment. Do you thrive on negative attention? There's one on every board :(
“Best Buy and Dell are losing share fast," says Macke. "They’re worth more private to these guys—Schulze and Dell—than they are in the public market…they’re not going to get a better white knight. In both cases the boards... the shareholders and the big institutions got too cute and now they’re going to lose the entire deal."
Jeff Smulyan, the founder, chairman & CEO of Emmis Communications Corp., caught a couple of well-earned breaks this past year.
A local marketing agreement he cut in April with ESPN Radio for the use of an Emmis FM station in New York looks exceedingly smart when compared with CBS Radio's purchase this month of another New York FM outlet. The Emmis deal will deliver about $10 million a year through 2014 for ESPN's use of 98.7 FM -- generating a total in excess of $120 million while leaving station ownership with Emmis -- whereas CBS Radio paid only $75 million for the outright acquisition of 101.9 FM.
Also, after closing on the sale of Los Angeles station 93.9 FM in August and committing the net proceeds of $79.6 million to repay debt, Emmis moved Moody's Investors Service to put the radio broadcaster's credit ratings on review for an upgrade. This, mind you, is the same Indianapolis-based company on the verge of being delisted by Nasdaq as recently as May.
These and other events all contributed to what Smulyan, speaking during Emmis' Oct. 12 earnings call, called "the transformation of the company." Success even extended to matters of litigation, the CEO said, when a federal court in Indiana denied a group of preferred shareholders a preliminary injunction to ban a vote on a host of amendments to Emmis' articles of incorporation.
Smulyan went so far as to call the Aug. 31 denial by U.S. District Judge Sarah Evans Barker "a resounding victory." But fewer and fewer will agree with this assessment the more familiar they become with the particulars of this very peculiar case. And that's exactly what Emmis' preferred-shareholder plaintiffs had in mind, no doubt, on filing their second amended complaint on Oct. 15.
The updated complaint isn't as colorful as its predecessors -- gone, for example, are references to "zombie shares that exist solely for controlling the vote of the preferred stock" -- but it's more to the point: Whether or not Emmis can strip security owners of the rights imbedded in their certificates when, in 1999, it issued 2.875 million preferred shares for $50 apiece.
Express terms of this $144 million offering included a 6.25% annual dividend, which would accumulate when not paid, a repurchase price of $50 per share and the requirement of a two-thirds affirmative vote of preferred shares on such issues as mergers, share exchanges and asset sales.
All went according to plan until a cash-strapped Emmis stopped paying dividends in October 2008, eventually setting up the right of preferred shareholders to elect two directors to the board when, six quarters later, those and all subsequent dividends still weren't paid. It didn't help, of course, that the two-thirds affirmative vote accorded preferred shareholders also managed to derail take-private efforts at Emmis in 2006 and 2010.
Equally unnerving to management was its becoming $26.1 million in arrears on preferred-share dividends by April 2012. This, in turn, had the unfortunate effect of boosting the value of the preferred stock's take-private put to $170 million in a company with a market cap of only $80 million.
Small wonder Smulyan sought an exit. But there's no way the spirit of the law tolerates the "three prongs" the second amended complaint attributes to Emmis' strategy for uprooting the rights of preferred shareholders: "(1) the repurchase of shares that Emmis would keep alive, artificially, solely for voting purposes; (2) the conduct of a modified 'Dutch Auction' tender offer without making necessary and proper disclosures; and (3) the dumping of repurchased shares into a sham trust controlled by Emmis."
Space doesn't allow for a thorough accounting of egregious efforts by Emmis to gain control of two-thirds of its preferred shares so that, on Sept. 4, it could effectively vote rights entrenched in those shares out of existence. But all one really needs to know is that, after prongs one and two failed to deliver the necessary vote, Emmis created an "employee retention plan" to which it issued -- wait for it -- 400,000 preferred shares.
Never mind that Emmis already had several employee benefit plans in place, including one capable of granting up to 2.2 million shares of common stock to worthy workers. The new plan, with Smulyan the designated trustee, had the singular advantage of putting Emmis over the top in its quest to marshal the mandatory preferred-share vote to eliminate preferred-share rights. And so it did, sending the price of its preferred shares down 40%, to $8.66 per share, in next-day trading.
When asked about preferred-share litigation during the earnings call, Smulyan acknowledged that a full trial is slated for next September and said, "We feel very strongly we'll prevail." But should he catch a break on this one, as he has been doing in other undertakings of late, he will have undermined the implicit and some explicit tenets of capital formation.
Emmis has been working tirelessly to put its financial house in order in recent years, and at least one careful observer is impressed. Wall Street ref Moody’s Investor Service says the company is under review for an upgrade of its current B3 rating.
A number of factors are playing into Moody’s rationale, including decent revenue performance during the most recent quarter, the close on the sale of KXOS and the use of funds received to repay debt; and the continued divestiture of non-core assets, including an $8.5M payday in exchange for some of the company’s magazines
And there’s more. Moody’s noted, “In September 2012, the company amended the rights of the holders of the Preferred Stock including canceling accumulated but undeclared dividends and eliminating restrictions on Emmis’ ability to pay common share dividends. Management also indicated it is looking to refinance existing debt facilities at significantly lower interest rates.”
The rating firm concluded, “Moody’s review of ratings will focus on the performance of radio and publishing operations and will also consider the company’s improving financial profile including the potential for greater free cash flow generation and continued debt reduction consistent with management’s stated goal to further reduce leverage.”
In order to comply with the terms of its senior credit agreement, Emmis Communications Corporation ("Emmis") exercised its early termination option under the total return swap transactions that it had entered into with certain holders of 1,484,679 shares of its 6.25% Series A Non-Cumulative Convertible Preferred Stock (the "Preferred Stock"). The termination was effective on September 19, 2012. As a result, the 1,484,679 shares of Preferred Stock return to the status of authorized but unissued shares, leaving 1,337,641 shares of Preferred Stock outstanding.
The price of Emmis Communications Corp.'s preferred stock plunged nearly 40% Wednesday, Sept. 5, in response to a shareholder vote dominated by Jeff Smulyan, the radio broadcaster's founder and leader, to wipe out $34 million in unpaid preferred-stock dividends.
The shareholder vote, originally scheduled for Aug. 14, was delayed until Sept. 4, in deference to a ruling by U.S. District Judge Sarah Evans Barker about whether certain preferred shareholders should be granted a preliminary injunction to prohibit all shareholders from voting on a host of amendments to Emmis' articles of incorporation. Barker denied the request in a decision issued Aug. 31.
The proposed amendments not only sought cancellation of the unpaid dividends but also removed the right of Emmis' preferred shareholders to vote as a separate class on such issues as mergers, share exchanges and asset sales. For these and other reasons, a group of preferred shareholders led by Corre Opportunities Fund LP filed suit against Indianapolis-based Emmis in April.
Emmis, undeterred, filed a proxy in late June that signaled its intent to pursue a vote on the proposed amendments. The proxy also called for the vote to be held at a special shareholder meeting on Aug. 14.
That's when Corre and fellow plaintiffs prevailed upon Barker to block the vote on grounds that Emmis chairman and CEO Smulyan, as well as the company's board, failed to comply with state and federal disclosure laws. Barker's response was to hold a hearing on the matter on July 31 and Aug. 1.
Barker's ruling on Aug. 31, based on evidence presented at the hearing, consisted of 50 pages that concluded the plaintiffs were unlikely to succeed in their claims or to suffer irreparable harm. About the latter, the judge determined that the plaintiffs are mostly concerned about the value of their preferred shares, for which they "can be made whole with money damages, if they subsequently prevail on their claims."
Despite the Aug. 31 ruling and the Sept. 4 vote, Emmis' boardroom behavior is likely to rankle advocates of corporate governance. Especially irksome to many was the ability of Smulyan to determine the shareholder vote's outcome.
As noted in the company's proxy, Smulyan controls 58.2% of the common-stock vote, primarily through his lock on supervoting Class B shares, whereas the company itself controls 66.8% of the preferred-stock vote, largely through the use of total return swaps that were contested in an amended complaint filed by Corre and others in May.
That complaint accused Emmis of repurchasing preferred shares from select holders but "keeping the vote alive" by having those shareholders enter into agreements that assign their voting rights to Emmis. For accounting purposes, though, the shares underlying the total return swaps were effectively extinguished.
"The result was the creation of what are essentially 'zombie shares' that exist solely for controlling the vote of the preferred stock," the complaint stated, "but are otherwise retired and extinguished as far as Emmis is concerned and provide no ongoing economic benefit to the seller."
The amended complaint also criticized Emmis for creating a 2012 retention plan trust, to which it issued 400,000 shares of newly created preferred stock. The professed intention of the trust was to help retain key employees, but its designated trustee was none other than Smulyan. "Emmis's control of both the 'zombie shares' and the 2012 Retention Plan Trust gave the company the two-thirds vote it needed to eliminate the rights and privileges of the preferred stock and render the shares worthless," the complaint charged.
Smulyan critics often consider Emmis' recent maneuvers a prelude to a third take-private attempt by the radio broadcaster's founder. And while Smulyan himself has said that's not his intent, it's undeniable that a second take-private attempt in 2010 foundered after a so-called locked-up group denied him the two-thirds preferred-share vote necessary for the effort to succeed.
Then, after nearly a half-year of negotiations and concessions finally got the locked-up group behind the plan, the hedge fund serving as Smulyan's financial backer balked. The price of Emmis' common stock collapsed in response, drifting below $1 per share long enough to elicit a Nasdaq notice in February about a possible delisting. It has since recovered to nearly $2.40 per share.
Delist the stock of a public company? He would need the BOD support. Not going to happen in a real world. BOD already shut him down twice. If you are talking about going private, he would have to offer quite a bit more than current price, a very costly move for him. There are laws in place. I think you should concentrate on how the company can increase shareholder value instead of eliminating it.
A U.S. District Court has denied a request for a preliminary injunction by a group of Emmis preferred shareholders who claimed, among other things, that Emmis should not have bought back preferred stock without first paying dividends. The company stopped paying dividends on the preferred stock in 2008. Smulyan tells Radio Ink he is very very pleased." An Emmis shareholder meeting is scheduled for next week. It was postponed until a judge made a ruling in this case.
The court said the plaintiffs failed to demonstrate that they'd have a reasonable likelihood of prevailing in court with their contention that Emmis violated the law and its own articles of incorporation, and therefore their request "failed to meet any of the threshold requirements for injunctive relief."
The ruling says, "At this preliminary stage of the litigation, Plaintiffs have failed to show that Defendants’ actions contravened either the [Indiana Business Corporation Law] or the relevant federal securities disclosure laws."