8-1-2012 (8:30 PM Update)
U.S. District Judge Sarah Evans Barker will wait until August 31st before making a ruling in the Emmis vs. preferred shareholders case. Barker listened to two days of testimony, then asked both sides to try to work it out one more time. The preferred shareholders are owed millions in back dividends and Emmis CEO Jeff Smulyan wants to make that go away so he can continue to rebuild the company and reduce debt.
Preferred shareholders want the judge to block a shareholder vote that was scheduled for August 14th. That vote will be delayed, according to Smulyan.
John Barrett of Corre Partners Management LLC, which controls the plaintiff fund, told Radio Ink last night, "We think our attorneys did a terrific job in presenting our case the past two days and we're very optimistic that judge barker, when she weighs our arguments and the compelling evidence we submitted, will see the strong merits of our case. We're looking forward to judge Barker's ruling at the end of the month. Our group still just simply wants the Emmis crusade to stop so that we can continue to own the preferred securities with all the accompanying rights we purchased in the market. We believe there is substantial upside potential for both Emmis and our securities, in spite of Emmis' attempts to prevent that."
The judge appeared to show some sympathy for the preferred shareholders. According to Bloomberg she said, ?Let?s say all requirements were satisfied. There is no doubt that Mr. Barrett and his group were victimized when they failed to sell their shares to Emmis and Smulyan. They were left holding an empty bag." The preferred shareholders allege that Emmis did not properly disclose its intent. Smulyan told Radio Ink last night he was very happy with how the hearing went.
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8-1-2012
Bloomberg reports that a federal judge will hear more arguments today after Emmis CEO Jeff Smulyan, COO Pat Walsh and representatives from the preferred shareholders group testified Tuesday. The investors want the judge to block an August 14th shareholder meeting from taking place. It's at that meeting where millions of dollars in preferred stock dividends might be wiped away. Smulyan told the judge he did not have plans to take the company private, which is one of the accusations being made by the preferred shareholders. They are also worried they are about two weeks away from losing millions of dollars.
According to Bloomberg, Emmis attorney Richard Kempf said, ?Emmis management is fulfilling its responsibility. It?s impossible for every constituency to be satisfied.? Smulyan testified he did not have plans to take the company private. He tried that and doesn't want to go down that road again. ?I?m worn out from two years ago. I just don?t want to do it. I can?t foresee a situation in which that would change.?
John Barrett from Core partners told the court that Walsh warned him last year Corre risked its investment being rendered worthless if it didn?t participate in the swaps program, according to the Bloomberg report. Barrett said he came away from that conversation believing Walsh had effectively said, ?I?m going to annihilate you.? When asked about that conversation, Walsh said he did not attempt to threaten Barrett ?There?s no coercion. I?m not allowed to coerce."
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