Emmis again extends offer to swap 12% PIK notes for 6.25% convertibles

By Susanna Moon

Chicago, Aug. 9 - Emmis Communications Corp. said it again extended its offer to issue 12% pay-in-kind senior subordinated notes due 2017 in exchange for any and all of its 6.25% series A cumulative convertible preferred stock, this time to 5 p.m. ET on Aug. 13.

The offer was pushed back from 5 p.m. ET on Aug. 6 and, before that, from Aug. 3.

Emmis also said the special meeting of shareholders held on Aug. 6 to vote on amendments to the terms of the preferreds was adjourned until Aug. 13. It was previously adjourned to Aug. 6 from Aug. 3.

Emmis said it had been informed that JS Acquisition, Inc. and JS Acquisition, LLC, both owned entirely by Jeffrey H. Smulyan, the chairman, chief executive officer and president of Emmis, are extending their tender offer to purchase all of Emmis' outstanding class A common stock for $2.40 per share in cash to 5 p.m. ET on Aug. 13 from Aug. 6.

As noted before, the offers are being extended because Emmis, JS Parent, JS Acquisition, Smulyan and certain other interested parties have been unable to date to reach an agreement in negotiations with a group that holds 38.3% of the preferreds, Emmis said. The group members previously advised Emmis and Smulyan that they would vote against the amendments to the terms of the preferreds at the special meeting.

Negotiations are continuing, and other options are being considered, including an alternative structure that would still allow a tender offer for the class A common stock to proceed without any changes to the terms of the preferreds and without an offer by Emmis to exchange the new notes for the preferreds.

As of 5 p.m. ET on Aug. 6, investors had tendered and not withdrawn 516,065 preferreds and 20,234,775 class A shares. On Aug. 3, Emmis said 1,574,615 preferreds had been tendered.

As announced on July 6, the exchange offer is required under the company's merger agreement with JS Acquisition. Financing for the transaction will be provided by an affiliate of Alden Global Capital.

The company announced plans for the exchange offer in a schedule TO filed with the Securities and Exchange Commission in April.

Holders who exchange will receive $30 principal amount of notes for each $50 liquidation preference of preferreds. No accumulated dividends will be paid.

The new notes will be callable at par at any time.

Exchanging holders are required to vote in favor of amendments to the terms of the preferreds that will:

• Eliminate the rights of the preferred holders to require Emmis to redeem all or a portion of their shares on the first anniversary of certain going-private transactions;

• Provide for the automatic conversion of any preferreds not exchanged upon the merger into $5.856, the amount that would be paid to holders of the 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.

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

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

The exchange offer will be conditioned on the receipt of consents from holders of two-thirds of the outstanding preferreds, the affirmative vote of more shares of class A common stock and class B common stock in favor than against each of the proposed amendments and at least 32.8% of the outstanding class A shares being tendered in JS Acquisition's tender offer.

The information agent is BNY Mellon Shareowner Services (866 301-0524 or 201 680-6579).

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

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