INDIANAPOLIS, Aug. 18, 2016 /PRNewswire/ -- Emmis
Communications Corporation (NASDAQ: EMMS) ("Emmis") today announced
that E Acquisition Corporation, an Indiana corporation currently owned by
Jeffrey H. Smulyan, the Chairman,
Chief Executive Officer and controlling shareholder of Emmis, and
expected to be also owned by certain directors, officers and other
shareholders of Emmis ("Purchaser"), has made a non-binding
proposal to acquire the outstanding publicly held shares of Emmis
for $4.10 per share in cash.
According to the proposal, the offer price represents premiums
of approximately 25% and 3%, respectively, over the over the 90-day
volume weighted average closing price and closing price of Emmis'
Class A Common Stock on August 17,
2016, the last trading day prior to the proposal.
The proposal states that the transaction would likely be
implemented through a merger of Emmis with the Purchaser. The
Proposal contemplates that, if the proposed transaction is
consummated, Emmis would no longer be a reporting company
registered with the Securities and Exchange Commission and would no
longer have any public shareholders with stock traded on
Nasdaq.
The proposal does not include a financing condition, and it
states that the Purchaser has obtained a committed acquisition
facility from an affiliate of Falcon Investment Advisors,
LLC. Moelis & Company provided financial advice in
connection with securing this financing commitment and related
matters. In conjunction with the possible merger, Purchaser
proposes to amend the terms of certain of Emmis' outstanding debt,
and the proposal indicates that, if a transaction is consummated,
Purchaser intends to reduce Emmis' indebtedness by selling certain
non-core assets of the business. Accordingly, the Board of
Directors has authorized Emmis to explore strategic alternatives
for its publishing division (other than Indianapolis Monthly
magazine), WLIB-AM (New York, New
York) and its radio stations in Terre Haute, Indiana.
The proposal further states that Purchaser intends to invite
certain other investors, which are expected to include certain
other officers and directors of Emmis and a limited number of other
accredited investors, to join in the offer as proposed by acquiring
equity interests in the Purchaser.
The proposal is subject to (i) reasonably satisfactory
completion of due diligence, other than business or operational due
diligence, by the financing sources, (ii) negotiation and execution
of definitive financing and transaction documentation satisfactory
to Purchaser and to Emmis, (iii) receipt of certain amendments to
Emmis' existing debt, (iv) absence of a material adverse change
with respect to Emmis and (v) receipt of all necessary government
regulatory approvals, which Purchaser currently expects will be
limited to Federal Communications Commission approvals and, if
applicable, compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
The proposal also states that the transaction will be subject to
approval by Emmis' shareholders. Under the terms of Emmis'
articles of incorporation, the transaction will be a "going
private" transaction involving Emmis and a purchaser affiliated
with Mr. Smulyan. The articles provide that in such
circumstances, the Class A Common Stock and Class B Common Stock
will vote together as a single class, with holders of the Class B
Common Stock receiving one vote per share, rather than the ten
votes per share they receive for any transaction that is not a
"going private" transaction for purposes of Emmis' articles of
incorporation. In such vote, Mr. Smulyan owns shares of Emmis
representing approximately 13% of the combined voting power of
shares entitled to vote on the proposal (calculated in each case to
include shares issuable under all options exercisable currently or
within 60 days).
In its proposal, Purchaser advised the Board of Directors of
Emmis that Mr. Smulyan will not agree to any other transaction
involving Emmis or his shares of Emmis. Under the terms of
Emmis' articles of incorporation, on any such other transaction
(other than the "going private" transaction described above) that
requires the approval of Emmis' shareholders, the Class A Common
Stock and Class B Common Stock will vote together as a single
class, with each share of Class A Common Stock entitled to one vote
per share and each share of Class B Common Stock entitled to ten
votes per share. Mr. Smulyan would in such circumstances have
approximately 52% of the combined voting power entitled to vote on
any such other transaction (calculated to include shares issuable
under all options exercisable currently or within 60 days), thereby
giving him the ability to prevent Emmis from engaging in any such
other transaction.
In response to the proposal, the Board of Directors of Emmis
announced that it has formed a Special Committee of disinterested
directors to consider the proposal. The Special Committee is
authorized to select its own financial and legal advisors.
Mr. Smulyan and the other directors of Emmis who will join
Purchaser will not participate in the evaluation of the proposal,
which requires the recommendation of the Special Committee and the
approval of the Board of Directors before going to shareholders for
consideration.
Emmis expects this process to have no impact on day-to-day
operations.
No assurance can be given that an agreement on terms
satisfactory to the Special Committee or the Board of Directors
will result from the proposal or that any transaction will be
completed.
Emmis does not anticipate making any further announcement
concerning the proposal unless and until a definitive agreement is
reached. If and when the parties reach a definitive agreement
with respect to the proposal, Emmis and Purchaser will file
appropriate materials with the Securities and Exchange Commission
and mail such materials to Emmis shareholders. Shareholders
and other interested parties should read Emmis' relevant documents
filed with the SEC when they become available because they will
contain important information. Emmis' shareholders will be
able to obtain such documents free of charge at the SEC's web site
(www.sec.gov) or from Emmis at One Emmis Plaza, 40 Monument Circle,
Suite 700, Indianapolis, Indiana
46204, Attn: Scott Enright.
Emmis Communications – Great Media, Great People, Great
Service®
Emmis Communications Corporation is a diversified media company,
principally focused on radio broadcasting. Emmis owns 19 FM and
4 AM radio stations in New York, Los
Angeles, St. Louis,
Austin (Emmis has a 50.1%
controlling interest in Emmis' radio stations located there),
Indianapolis and Terre Haute, IN. Emmis also developed and
licenses TagStation®, a cloud-based software platform that allows a
broadcaster to manage album art, metadata and enhanced advertising
on its various broadcasts, and developed NextRadio®, a smartphone
application that marries over-the-air FM radio broadcasts with
visual and interactive features on smartphones.
Note: Statements in this release represent the
parties' current intentions, plans, expectations and beliefs and
involve risks and uncertainties that could cause actual events to
differ materially from the events described in this release,
including risks or uncertainties related to the success of the
negotiations with the special committee and whether the merger will
be completed, as well as changes in general economic conditions,
stock market trading conditions, tax law requirements or government
regulation, and changes in the broadband communications industry or
the business or prospects of Emmis. The reader is cautioned
that these factors, as well as other factors described or to be
described in SEC filings with respect to the transaction, are among
the factors that could cause actual events or results to differ
materially from the current expectations described herein. No
agreement, arrangement or understanding with respect to the
acquisition of the stock of Emmis described above shall be
created (or deemed created for any purpose) until such time as
definitive documentation providing for any such agreement,
arrangement, or understanding has been approved by the special
committee and the Board of Directors of Emmis and thereafter
executed and delivered by Emmis and all other relevant persons.
Certain statements included in this release which
are not statements of historical fact, including but not limited to
those identified with the words "expect," "will" or "look" are
intended to be, and are, by this Note, identified as
"forward-looking statements," as defined in the Securities and
Exchange Act of 1934, as amended. Such statements involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of Emmis to
be materially different from any future result, performance or
achievement expressed or implied by such forward-looking
statement. Such factors include, among others:
- general economic and business conditions;
- fluctuations in the demand for advertising and demand for
different types of advertising media;
- our ability to service our outstanding debt;
- competition from new or different technologies;
- increased competition in our markets and the broadcasting
industry, including our competitors changing the format of a
station they operate to more directly compete with a station we
operate in the same market;
- our ability to attract and secure programming, on-air
talent, writers and photographers;
- inability to obtain (or to obtain timely) necessary
approvals for purchase or sale transactions or to complete the
transactions for other reasons generally beyond our
control;
- Purchaser's offer to purchase being terminated or modified
materially;
- increases in the costs of programming, including on-air
talent;
- inability to grow through suitable acquisitions or to
consummate dispositions;
- new or changing regulations of the Federal Communications
Commission or other governmental agencies;
- war, terrorist acts or political instability;
- and other factors mentioned in documents filed by Emmis with
the Securities and Exchange Commission
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SOURCE Emmis Communications Corporation