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

By Angela McDaniels

Tacoma, Wash., Aug. 30 - Emmis Communications Corp. extended the exchange offer for its 6.25% series A cumulative convertible preferred stock to 5 p.m. ET on Sept. 2 from 5 p.m. ET on Aug. 27, according to a company news release.

Emmis also adjourned the special meeting of shareholders to vote on amendments to the terms of the convertibles until Sept. 2.

The expiration of the exchange offer and the shareholder meeting date were originally scheduled for Aug. 3 and have been delayed multiple times.

JS Acquisition, Inc. and JS Acquisition, LLC, both owned by Emmis chairman, chief executive officer and president Jeffrey H. Smulyan, have extended their tender offer to purchase all of Emmis' outstanding class A common stock for $2.40 per share to 5 p.m. ET on Sept. 2 from Aug. 27. It was previously prolonged from Aug. 6, Aug. 13 and Aug. 20.

Emmis said that the offers were extended because the company, JS Parent, JS Acquisition and Smulyan are still in negotiations with a group that holds 38.3% of the convertibles - the group members previously said they would vote against the amendments to the terms of the convertibles at the special meeting - and Alden Global Capital, a private asset management company that had previously agreed to provide financing for the tender offer through an affiliate.

During the past several weeks, the parties negotiated and agreed in principle on revised terms for the offers, but Alden subsequently said it would no longer support the negotiated terms, according to the release.

Emmis said that the discussions continue, but JS Acquisition believes it is unlikely that an agreement will be reached with either Alden or the group of convertibles holders.

Results to date

As of 5 p.m. ET on Aug. 27, investors had tendered and not withdrawn 422,403 convertibles, down from 423,203 on Aug. 20, 516,065 on Aug. 6 and 1,574,615 on Aug. 3.

Holders had tendered 21,274,709.46 class A shares as of 5 p.m. ET on Aug. 27, compared with 21,244,802.46 shares on Aug. 20, 20,745,196.463 on Aug. 13 and 20,234,775 on Aug. 6.

As announced on July 6, the exchange offer is required under the company's merger agreement with JS Acquisition.

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 12% pay-in-kind senior subordinated notes due 2017 for each $50 liquidation preference of convertibles. 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 convertibles that will:

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

• Provide for the automatic conversion of any convertibles 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 convertibles were convertible immediately prior to the merger; and

• Eliminate the right of the convertibles 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 convertibles at the special shareholder meeting.

The exchange offer is conditioned on the amendments becoming effective, 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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