June 22, 2011
Depending on how this deal shakes out at the closing table, Emmis will get between $110 and $130 million and a piece of Merlin. The size of the piece all depends on the amount of cash they take. Emmis purchased WLUP (The Loop) in 2005 from Bonneville in exchange for KTAR-AM, KMVP-AM, and KKLT-FM in Phoenix and $70 million in cash. Emmis has had WKQX since 1988 when it was picked up from NBC as part of a five-station deal valued at $121.5 million.
According to Emmis SEC filing on the Merlin transaction, the trio of stations brought in $24.4 million in net revenues for Emmis in fiscal 2009 with a net operating loss of $161.7 million. 2010 revenues were $22.9 million, with a net operating loss of $81.8 million, and in fiscal 2011, net revenues came in at $25.3 million, and net operating income was $1.4 million. The 2009 and 2010 numbers include impairment losses of $155.5 million and $78.2 million, respectively.
"While it is always difficult to part with stations that have been valuable contributors to our company, we believe that today's transaction will create significant value for our shareholders," said Jeff Smulyan, Chairman & CEO of Emmis. "As a significant minority partner in Merlin Media, we're delighted to remain engaged with these markets and stations in the exciting days ahead."
More from the filing: "Emmis? rights with respect to its retained equity interests in Merlin Media will be governed by a limited liability company agreement to be executed at closing with the Investors (the ?LLC Agreement?). Emmis will retain preferred equity and common equity interests in Merlin Media. Emmis' common interests will vary depending on the cash election by Emmis under the Purchase Agreement, and will initially represent approximately 20% to 35% of Merlin?s common equity interests. Emmis' preferred interests will also vary depending on the cash election by Emmis under the Purchase Agreement and will initially represent from approximately $28 million to $47 million of preferred interests, accruing a return of 8% per annum. The preferred interests held by Emmis will initially be junior to preferred interests held by the Investors of approximately $87 million to $67 million (depending on the cash election by Emmis under the Purchase Agreement), which senior preferred also accrues a return at a rate of 8% per annum. The Emmis junior preferred will also be junior to at least $60 million of a senior secured note to be issued to GTCR in the transaction. The note will mature five years from closing and will accrue interest at a rate of 15% per annum."
Under the LLC Agreement, Emmis will be entitled initially to appoint one out of five members of Merlin Media?s board of managers and will have limited consent rights with respect to specified transactions. Emmis will have no obligation to make ongoing capital contributions to Merlin Media, but is subject to dilution if it fails to participate pro rata in future capital calls.
According to Emmis SEC filing on the transaction, the trio of stations brought in $24.4 million in net revenues for Emmis in fiscal 2009 (Emmis' fiscal year ends February 28), with a net operating loss of $161.7 million. In 2010, revenues were $22.9 million, with a net operating loss of $81.8 million, and in fiscal 2011, net revenues came in at $25.3 million, and net operating income was $1.4 million. The 2009 and 2010 numbers include impairment losses of $155.5 million and $78.2 million, respectively.
(6/21/2011 3:59:53 PM)
Is he getting back in? He's bought (with private equity firms) more than 100 million dollars worth of radio stations. I think that qualifies....he's in.
(6/21/2011 8:39:55 AM)
Just heard through an insider that this is a done deal.
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