Emmis to offer 12% notes in exchange for 6.25% convertible preferreds

By Angela McDaniels

Tacoma, Wash., May 25 - Emmis Communications Corp. plans to offer newly issued 12% senior subordinated notes due 2017 in exchange for all of its outstanding 6.25% series A cumulative convertible preferred stock, according to a company news release.

The exchange offer is required under the company's merger agreement with JS Acquisition, LLC, a company formed by Emmis chairman and chief executive officer Jeffrey H. Smulyan to take the company private. The financing for the transaction will be provided by an affiliate of Alden Global Capital.

Holders will receive notes with a principal amount equal to 60% of the liquidation preference of the preferreds.

Exchanging holders will be required to consent to the elimination of the provisions of Emmis' articles of incorporation providing for a redemption at par in connection with a going-private transaction; provide for the automatic conversion of any preferreds not exchanged upon the merger into $5.86, the amount that would be paid to holders of class A common stock into which the preferreds were convertible immediately prior to the merger; and eliminate the right of the preferred holders to nominate directors to Emmis' board of directors in some circumstances.

For the amendments to be effective, they must receive the vote of holders of two-thirds of the outstanding preferreds.

Alden, which currently holds 41.4% of the preferreds, has agreed to vote in favor of the amendments and exchange its preferreds for notes.

Emmis is an Indianapolis-based diversified media company principally focused on radio broadcasting.

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