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Exhibit
(a)(1)(i)
Offer to Purchase
by
Emmis Communications
Corporation
Up to $6,000,000 in Value of
Shares of Its 6.25% Series A
Cumulative Convertible
Preferred Stock
At a Cash Purchase Price Not
Greater than $15.56 per Preferred Share
Nor Less than $12.50 per
Preferred Share
THE OFFER, PRORATION PERIOD AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, NEW YORK CITY
TIME, ON FRIDAY, DECEMBER 30, 2011, UNLESS THE OFFER IS EXTENDED
(SUCH DATE AND TIME, AS THEY MAY BE EXTENDED, THE
“EXPIRATION DATE”)
Emmis Communications Corporation, an Indiana corporation (the
“Company,” “Emmis,” “we,”
“us” or “our”), is offering to purchase up
to $6,000,000 in value of shares of our 6.25% Series A
Cumulative Convertible Preferred Stock, $0.01 par value per
share (the “Preferred Shares”), at a price not greater
than $15.56 nor less than $12.50 per Preferred Share, to the
seller in cash, less any applicable withholding taxes and
without interest, upon the terms and subject to the conditions
described in this Offer to Purchase and in the related Letter of
Transmittal (which together, as they may be amended or
supplemented from time to time, constitute the
“Offer”).
We are offering to purchase up to $6,000,000 in value of
Preferred Shares in the Offer. Upon the terms and subject to the
conditions of the Offer, we will determine a single per
Preferred Share price that we will pay for Preferred Shares
properly tendered and not properly withdrawn from the Offer,
taking into account the total number of Preferred Shares
tendered and the prices specified by tendering shareholders. We
will select the lowest single purchase price, not greater than
$15.56 nor less than $12.50 per Preferred Share, that will allow
us to purchase $6,000,000 in value of Preferred Shares, or a
lower amount depending on the number of Preferred Shares
properly tendered and not properly withdrawn (such purchase
price, the “Final Purchase Price”). If, based on the
Final Purchase Price, Preferred Shares having an aggregate value
of less than $6,000,000 are properly tendered and not properly
withdrawn, we will buy all Preferred Shares properly tendered
and not properly withdrawn. All Preferred Shares acquired in the
Offer will be acquired at the Final Purchase Price, including
those Preferred Shares tendered at a price lower than the Final
Purchase Price. Only Preferred Shares properly tendered at
prices at or below the Final Purchase Price, and not properly
withdrawn, will be purchased. Nevertheless, because of the
“odd lot” priority, proration and conditional tender
offer provisions described in this Offer to Purchase, all of the
Preferred Shares tendered at or below the Final Purchase Price
may not be purchased if, based on the Final Purchase Price,
Preferred Shares having an aggregate value in excess of
$6,000,000 are properly tendered and not properly withdrawn.
However, if the application of the “odd lot” priority
would result in our non-compliance with the listing standards of
the Nasdaq-GS, we will not apply such priority. Preferred Shares
not purchased in the Offer will be returned at our expense to
the tendering shareholders promptly following the Expiration
Date. Subject to applicable law, we reserve the right, in our
sole discretion, to change the per Preferred Share purchase
price range and to increase or decrease the value of Preferred
Shares sought in the Offer. In accordance with the rules of the
Securities and Exchange Commission (the “SEC”), we may
increase the number of Preferred Shares accepted for payment in
the Offer by no more than 2% of the outstanding Preferred Shares
without amending or extending the Offer. See Section 1
(“Number of Preferred Shares; Proration”).
At the maximum Final Purchase Price of $15.56 per Preferred
Share, we could purchase 385,604 Preferred Shares if the Offer
is fully subscribed, which would represent approximately 14.8%
of the issued and outstanding Preferred Shares as of
December 1, 2011. At the minimum Final Purchase Price of
$12.50 per Preferred Share, we could purchase 480,000 Preferred
Shares if the Offer is fully subscribed, which would represent
approximately 18.4% of the issued and outstanding Preferred
Shares as of December 1, 2011.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF
PREFERRED SHARES BEING TENDERED. THE OFFER IS, HOWEVER,
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7
(“Conditions of the Offer”).
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The Preferred Shares are listed and traded on the National
Association of Securities Dealers Automated Quotation Global
Select Market (“Nasdaq-GS”) under the symbol
“EMMSP.” On November 29, 2011, the last full trading
day prior to the announcement of the Offer, the last reported
sale price of the Preferred Shares was $14.15 per Preferred
Share. You are strongly urged to obtain current market
quotations for the Preferred Shares before deciding whether and
at what purchase price or purchase prices to tender your
Preferred Shares. See Section 8 (“Price Range of
Preferred Shares; No Payment of Unpaid Dividends or
Distributions on Preferred Shares Accepted in the
Offer”).
OUR BOARD OF DIRECTORS, WITH EIGHT DIRECTORS IN FAVOR AND ONE
DIRECTOR (WHO WAS THE REMAINING DIRECTOR APPOINTED BY THE
HOLDERS OF THE PREFERRED SHARES) DISSENTING, HAS AUTHORIZED US
TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR ANY MEMBER OF OUR
BOARD OF DIRECTORS OR BNY MELLON SHAREOWNER SERVICES, THE
INFORMATION AGENT (THE “INFORMATION AGENT”) AND THE
DEPOSITARY (THE “DEPOSITARY”) FOR THE OFFER, MAKES ANY
RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR PREFERRED SHARES OR AS TO THE PURCHASE
PRICE OR PURCHASE PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR
PREFERRED SHARES. NEITHER WE NOR ANY MEMBER OF OUR BOARD OF
DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY HAS
AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION WITH RESPECT TO
THE OFFER. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO
TENDER YOUR PREFERRED SHARES AND, IF SO, HOW MANY PREFERRED
SHARES TO TENDER AND THE PURCHASE PRICE OR PURCHASE PRICES
AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSULT
YOUR OWN FINANCIAL AND TAX ADVISORS, AND READ CAREFULLY AND
EVALUATE THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE
RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING
THE OFFER. SEE SECTION 2 (“PURPOSE OF THE OFFER;
CERTAIN EFFECTS OF THE OFFER”).
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THE OFFER OR PASSED UPON THE MERITS
OR FAIRNESS OF SUCH TRANSACTION OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE INFORMATION CONTAINED IN THIS OFFER TO PURCHASE.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL AND MAY BE A
CRIMINAL OFFENSE.
This Offer to Purchase and the related Letter of Transmittal are
first being mailed to the holders of Preferred Shares on or
around December 1, 2011.
If you have questions or need assistance, you should contact the
Information Agent at the address and telephone number set forth
on the back cover of this Offer to Purchase. If you require
additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or other related
materials, you should contact the Information Agent.
The Information Agent for the Offer is:
Offer to Purchase dated December 1, 2011
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IMPORTANT
If you desire to tender all or any portion of your Preferred
Shares, you must do one of the following before the Offer
expires at 5:00 p.m., New York City Time, on Friday,
December 30, 2011 (unless the Offer is extended):
| • | if your Preferred Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and request that the nominee tender your Preferred Shares for you; | |
| • | if you hold certificates registered in your own name, complete and sign a Letter of Transmittal, according to its Instructions, and deliver it, together with any required signature guarantees, the certificates for your Preferred Shares and any other documents required by the Letter of Transmittal, to BNY Mellon Shareowner Services, the Depositary for the Offer; or | |
| • | if you are an institution participating in The Depository Trust Company, which we call the “Book-Entry Transfer Facility” in this Offer to Purchase, tender your Preferred Shares according to the procedure for book-entry transfer described in Section 3 (“Procedures for Tendering Preferred Shares”). |
If you want to tender your Preferred Shares, but: (a) the
certificates for your Preferred Shares are not immediately
available or cannot be delivered to the Depositary by the
Expiration Date; (b) you cannot comply with the procedure
for book-entry transfer by the Expiration Date; or (c) your
other required documents cannot be delivered to the Depositary
by the Expiration Date, you can still tender your Preferred
Shares if you comply with the guaranteed delivery procedures
described in Section 3 (“Procedures for Tendering
Preferred Shares”).
If you wish to maximize the chance that your Preferred Shares
will be purchased in the Offer, you should check the box in the
section of the Letter of Transmittal captioned “Preferred
Shares Tendered At Price Determined Under The Offer.”
If you agree to accept the purchase price determined in the
Offer, your Preferred Shares will be deemed to be tendered at
the minimum price of $12.50 per Preferred Share. You should
understand that this election may lower the Final Purchase Price
and could result in your Preferred Shares being purchased at the
minimum price of $12.50 per Preferred Share. The lower end of
the price range for the Offer is below the last reported sale
price of the Preferred Shares on the Nasdaq-GS on November 29,
2011, the last full trading day prior to announcement of the
Offer, which was $14.15 per Preferred Share.
None of the Final Purchase Price will be allocated to
accumulated and unpaid dividends or distributions, and no
dividend will be paid on the Preferred Shares in connection with
the Offer. Tendering holders of the Preferred Shares that are
purchased in the Offer will no longer have any rights in respect
of the accumulated and unpaid dividends or distributions on
those Preferred Shares purchased by us.
We are not making the Offer to, and will not accept any tendered
Preferred Shares from, shareholders in any jurisdiction where it
would be illegal to do so. However, we may, at our discretion,
take any actions necessary for us to make the Offer to
shareholders in any such jurisdiction.
You may contact the Information Agent or your broker, dealer,
commercial bank, trust company or other nominee for assistance.
The contact information for the Information Agent is set forth
on the back cover of this Offer to Purchase.
OUR BOARD OF DIRECTORS, WITH EIGHT DIRECTORS IN FAVOR AND ONE
DIRECTOR (WHO WAS THE REMAINING DIRECTOR APPOINTED BY THE
HOLDERS OF THE PREFERRED SHARES) DISSENTING, HAS AUTHORIZED US
TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR ANY MEMBER OF OUR
BOARD OF DIRECTORS OR BNY MELLON SHAREOWNER SERVICES, THE
INFORMATION AGENT AND THE DEPOSITARY FOR THE OFFER, MAKES ANY
RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR PREFERRED SHARES OR AS TO THE PURCHASE
PRICE OR PURCHASE PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR
PREFERRED SHARES. NEITHER WE NOR ANY MEMBER OF OUR BOARD OF
DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY HAS
AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION WITH RESPECT TO
THE OFFER. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO
TENDER YOUR PREFERRED SHARES AND, IF SO, HOW MANY PREFERRED
SHARES TO TENDER AND THE PURCHASE PRICE OR PURCHASE PRICES
AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSULT
YOUR OWN FINANCIAL AND TAX ADVISORS, AND READ CAREFULLY AND
EVALUATE THE INFORMATION IN THIS OFFER TO PURCHASE AND IN
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THE RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR
MAKING THE OFFER. SEE SECTION 2 (“PURPOSE OF THE
OFFER; CERTAIN EFFECTS OF THE OFFER”).
THE STATEMENTS MADE IN THIS OFFER TO PURCHASE ARE MADE AS OF
THE DATE ON THE COVER PAGE AND THE STATEMENTS INCORPORATED
BY REFERENCE ARE MADE AS OF THE DATE OF THE DOCUMENTS
INCORPORATED BY REFERENCE. THE DELIVERY OF THIS OFFER TO
PURCHASE AND THE RELATED LETTER OF TRANSMITTAL SHALL NOT UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN OR INCORPORATED BY REFERENCE IS CORRECT AS OF A
LATER DATE OR THAT THERE HAS NOT BEEN ANY CHANGE IN SUCH
INFORMATION OR IN OUR AFFAIRS SINCE SUCH DATES.
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SUMMARY
TERM SHEET
We are providing this summary for your convenience. It
highlights certain material information contained in this Offer
to Purchase, but it does not describe all of the details of the
Offer to the same extent described elsewhere in this Offer to
Purchase. To fully understand the Offer described in this Offer
to Purchase and for a more complete description of the terms of
the Offer, we strongly urge you to carefully read the entire
Offer to Purchase, the related Letter of Transmittal and the
documents incorporated by reference. The following summary is
qualified in its entirety by the more detailed information
appearing elsewhere in the Offer to Purchase and the related
Letter to Transmittal. We have included references to the
sections of this Offer to Purchase where you will find a more
complete discussion.
| The Offeror |
• The Offer is being made by Emmis Communications
Corporation, an Indiana corporation. Emmis’ principal
executive office is located at One Emmis Plaza, 40 Monument
Circle, Suite 700, Indianapolis, Indiana 46204, and its main
telephone number is (317) 266-0100.
|
|
| The Preferred Shares Subject to the Offer |
• Up to $6,000,000 in value of the outstanding 6.25%
Series A Cumulative Convertible Preferred Stock of Emmis,
$0.01 par value per share.
|
|
| See Section 1 (“Number of Preferred Shares; Proration”). | ||
| Terms of the Offer |
• We are offering to purchase up to $6,000,000 in
value of Preferred Shares in the Offer. Upon the terms and
subject to the conditions of the Offer, we will determine a
single per Preferred Share price by taking into account the
total number of Preferred Shares tendered and the prices
specified by tendering shareholders. We will select the lowest
single purchase price, not greater than $15.56 nor less than
$12.50 per Preferred Share, that will allow us to purchase
$6,000,000 in value of Preferred Shares, or a lower amount
depending on the number of Preferred Shares properly tendered
and not properly withdrawn (the “Final Purchase
Price”).
|
|
|
• If, based on the Final Purchase Price, Preferred
Shares having an aggregate value of less than $6,000,000 are
properly tendered and not properly withdrawn, we will buy all
Preferred Shares properly tendered and not properly withdrawn.
All Preferred Shares acquired in the Offer will be acquired at
the Final Purchase Price, including those Preferred Shares
tendered at a price lower than the Final Purchase Price. Only
Preferred Shares properly tendered at prices at or below the
Final Purchase Price, and not properly withdrawn, will be
purchased. Nevertheless, because of the “odd lot”
priority, proration and conditional tender offer provisions
described in this Offer to Purchase, all of the Preferred Shares
tendered at or below the Final Purchase Price may not be
purchased if, based on the Final Purchase Price, Preferred
Shares having an aggregate value in excess of $6,000,000 are
properly tendered and not properly withdrawn. However, if the
application of the “odd lot” priority would result in
our non-compliance with the listing standards of the Nasdaq-GS,
we will not apply such priority. Preferred Shares not purchased
in the Offer will be returned at our expense to the tendering
shareholders promptly following the Expiration Date.
|
||
|
• Subject to applicable law, we reserve the right, in
our sole discretion, to change the per Preferred Share purchase
price range and to increase or decrease the value of Preferred
Shares sought in the Offer. In accordance with the rules of the
SEC, we may increase the number of Preferred Shares accepted for
payment in the Offer by no more than 2% of the outstanding
Preferred Shares without amending or extending the Offer.
|
||
| See Section 1 (“Number of Preferred Shares; Proration”). |
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| Offer Payment |
• For each tendered Preferred Share accepted for
purchase by us, the holder will receive the Final Purchase Price.
|
|
| See Section 1 (“Number of Preferred Shares; Proration”). | ||
| Proration |
• If proration of the Preferred Shares is required,
due to our inability to accept for purchase all Preferred Shares
validly tendered and not properly withdrawn prior to the
Expiration Date without exceeding an aggregate of $6,000,000 in
value of Preferred Shares, Emmis or the Depositary will
determine the final proration factor as soon as practicable
after the Expiration Date, and we will announce the results of
proration by press release.
|
|
| See Section 1 (“Number of Preferred Shares; Proration”). | ||
| No Payment of Dividends or Distributions |
• We have not declared a dividend on our Preferred
Shares since October 15, 2008. As of December 1, 2011,
dividends in arrears totaled $26,709,744, or $10.22 per
Preferred Share. Agreements governing our existing indebtedness
(including our Senior Secured Credit Facility (as defined below)
and Notes Facility (as defined below)) prohibit us from paying
dividends or distributions on the Preferred Shares, our shares
of Class A common stock, $0.01 par value per share (the
“Class A Common Stock”) and our shares of
Class B common stock, $0.01 par value per share (the
“Class B Common Stock”), and declaration and
payment of future dividends or distributions will be at the
discretion of Emmis’ Board of Directors. Shares of
Class A Common Stock and shares of Class B Common
Stock are referred to collectively as “Common Shares.”
|
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|
• None of the Final Purchase Price will be allocated
to accumulated and unpaid dividends or distributions, and no
dividend will be paid on the Preferred Shares in connection with
the Offer. Tendering holders of the Preferred Shares that are
purchased in the Offer will no longer have any rights in respect
of the accumulated and unpaid dividends or distributions on
those Preferred Shares purchased by us.
|
||
| See Section 8 (“Price Range of Preferred Shares; No Payment of Unpaid Dividends or Distributions on Preferred Shares Accepted in the Offer”). | ||
| Conditions to the Offer | The Offer is subject to certain conditions precedent, including the following: | |
|
• the satisfaction of all conditions precedent under
the Note Purchase Agreement, dated November 10, 2011, by
and among Emmis and Zell Credit Opportunities Master Fund, L.P.
(the “Notes Facility”) for the borrowing of aggregate
proceeds under the Notes Facility that are sufficient to fund
the purchase of the Preferred Shares in the Offer and to pay all
related fees and expenses;
|
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|
• the closing sale price of the Preferred Shares on
the Nasdaq-GS has not exceeded $15.56 for any five or more
trading days on or after November 30, 2011 and on or prior
to the Expiration Date;
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• the absence of various material adverse changes
affecting us;
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• the absence of various actions, litigations,
judgments or administrative actions;
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• the absence of a default or event of default under
the Notes Facility and the Amended and Restated Credit and Term
Loan Agreement (as amended, the “Senior Secured Credit
Facility”), dated November 2, 2006, by and among Emmis
Operating Company, Emmis Communications Corporation, and the
lenders and other parties set forth on the signature pages
thereto;
|
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|
• the absence of various market disruptions and other
significant negative events affecting the financial markets or
the U.S. or global economy;
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• that we have not determined, in our reasonable
judgment, that the consummation of the Offer and the purchase of
the Preferred Shares may (1) cause the Offer to be a
“Rule 13e-3
transaction” for purposes of
Rule 13e-3
under the Securities Exchange Act of 1934 (as amended, the
“Exchange Act”) or (2) cause the Preferred Shares
to be delisted from the Nasdaq-GS; and
|
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|
• certain other customary conditions precedent.
|
||
| See Section 7 (“Conditions of the Offer”) and Section 9 (“Source and Amount of Funds”) for additional details regarding the foregoing conditions precedent. | ||
| Aggregate Consideration |
• We will pay up to $6,000,000 for the purchase of the
Preferred Shares pursuant to the Offer.
|
|
| See Section 1 (“Number of Preferred Shares; Proration”). | ||
| Expiration of the Offer |
• The Offer will expire at 5:00 p.m., New York
City Time, on Friday, December 30, 2011, unless extended or
earlier terminated.
|
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| How to Tender Your Preferred Shares |
• If you hold certificates registered in your own
name, complete and sign a Letter of Transmittal, according to
its Instructions, and deliver it, together with any required
signature guarantees, the certificates for your Preferred Shares
and any other documents required by the Letter of Transmittal,
to BNY Mellon Shareowner Services, the Depositary for the Offer.
|
|
|
• If your Preferred Shares are registered in the name
of a broker, dealer, commercial bank, trust company or other
nominee, contact the nominee and request that the nominee tender
your Preferred Shares for you.
|
||
|
• If you are an institution participating in The
Depository Trust Company, which we call the
“Book-Entry Transfer Facility” in this Offer to
Purchase, tender your Preferred Shares according to the
procedure for book-entry transfer described in Section 3
(“Procedures for Tendering Preferred Shares”).
|
||
| See Section 3 (“Procedures for Tendering Preferred Shares”). | ||
| Acceptance for Payment and Payment for Preferred Shares |
• On the terms and subject to the conditions of the
Offer, promptly following the Expiration Date, we will determine
the Final Purchase Price and accept for payment and pay for
Preferred Shares that are properly tendered at prices at or
below the Final Purchase Price and are not properly withdrawn,
subject to possible delay due to proration.
|
|
| See Section 5 (“Purchase of Preferred Shares and Payment of Purchase Price”). | ||
| Withdrawal Rights |
• You may withdraw previously tendered Preferred
Shares at any time before the Expiration Date, but not
thereafter.
|
|
|
• If you tendered your Preferred Shares by giving
instructions to a broker, bank or other nominee, you must
instruct the broker, bank or other nominee to arrange for the
withdrawal of your Preferred Shares.
|
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|
• In addition, tendered Preferred Shares that have not
been accepted for purchase may be withdrawn after
5:00 p.m., New York City Time, on Monday, January 30,
2012, 40 business days after the commencement of the Offer.
|
||
| See Section 4 (“Withdrawal Rights”). | ||
| Material Federal Income Tax Considerations | See Section 14 (“Material United States Federal Income Tax Consequences”). | |
| Risk Factors |
• You should consider carefully all of the information
set forth in this Offer to Purchase and, in particular, you
should evaluate the specific factors set forth under “Risk
Factors” before deciding whether to participate in the
Offer.
|
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| Effects of the Offer on Emmis |
• We believe that the successful completion of the
Offer will provide some liquidity to holders of the Preferred
Shares at prices that they may not be able to obtain through
market sales.
|
|
|
• Because we will be purchasing a number of the
Preferred Shares at a discount to their liquidation preference
and without paying any accrued and unpaid dividends on the
Preferred Shares, the Offer will be accretive to the holders of
our common equity.
|
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|
• Assuming that $6,000,000 of Preferred Shares are
purchased in the Offer at a Final Purchase Price of $15.56 per
Preferred Share, the Offer will have the following effects on
Emmis:
|
||
|
• Excluding Preferred Shares in which we
have acquired rights to date (including those Preferred Shares
whose vote we are currently able to direct), preferred equity
will comprise approximately 14% of our total capitalization,
down from approximately 20% as of November 30, 2011;
|
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|
• We will not have any obligation to pay
accrued and unpaid dividends or distributions on any Preferred
Shares accepted for purchase pursuant to the Offer, which we
estimate will result in the elimination of $3,942,470 of accrued
and unpaid dividends or distributions;
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• As a result of eliminating a substantial
number of Preferred Shares, we estimate that our annual dividend
expense, which decreases net income available to common
shareholders, will decrease by $1,451,417 per year;
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• We will incur additional interest
expense on amounts drawn under our Notes Facility of $1,377,000
per year, compounded on a quarterly basis; and
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• The 1,484,679 Preferred Shares whose
vote we are currently able to direct pursuant to agreements we
entered into previously with holders of those shares will
constitute 66.673% of the issued and outstanding Preferred
Shares following the completion of the Offer. We do not intend
to cause these Preferred Shares to be tendered in the Offer.
|
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• Following the completion of the Offer, we may
continue to engage in discussions and negotiations with holders
of Preferred Shares with respect to, among other things,
acquiring their Preferred Shares or entering into voting or
other arrangements with such holders. Although our Board of
Directors has not made any determinations with respect to making
amendments to the terms of the Preferred Shares, if we are able
to obtain the ability to direct the vote of at least
662/3%
of the issued and outstanding Preferred Shares following the
completion of the Offer, we may elect to, among other things,
amend various provisions applicable to the Preferred Shares,
including but not limited to: (i) reducing or eliminating
the liquidation preference of the Preferred Shares,
(ii) removing the ability of the holders of Preferred
Shares to require the Company to repurchase all or any portion
of such holders’ Preferred Shares upon a change of control
or certain going-private transactions, (iii) removing the
Company’s obligation to pay to holders of Preferred Shares
the amount of dividends in respect of their Preferred Shares
that are currently accrued and unpaid, (iv) changing the
designation of the Preferred Shares from “Cumulative”
to “Non-Cumulative” such that dividends or
distributions on the Preferred Shares shall cease to accrue,
(v) eliminating the rights of the holders of Preferred
Shares to nominate directors to the Company’s Board of
Directors as a result of arrearages in dividends, and
(vi) eliminating the restrictions on the Company’s
ability to pay dividends or make
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| distributions on its Common Shares prior to paying accrued and unpaid dividends or distributions on Preferred Shares. If the above-described amendments are made, the market value of the Preferred Shares remaining outstanding may be materially and adversely affected, and we may engage in various actions that are currently prohibited or limited by the various provisions of the Preferred Shares. | ||
|
|
See Section 2 (“Purpose of the Offer; Certain Effects of the Offer”), Section 9 (“Source and Amount of Funds”) and Section 12 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares of the Company”). | |
| Source and Amount of Funds |
• The maximum value of Preferred Shares purchased in
the Offer will be $6,000,000. We expect that the maximum
aggregate cost of this purchase, including all fees and expenses
applicable to the Offer, to be approximately $6,500,000. We
intend to use funds borrowed under our Notes Facility to
purchase the Preferred Shares in the Offer and to pay all
related fees and expenses.
|
|
| See Section 9 (“Source and Amount of Funds”). | ||
| Possible Consequences if the Offer is not Completed |
• If any conditions of the Offer are not satisfied, we
will be under no obligation to purchase the Preferred Shares. No
dividend will be paid on the Preferred Shares in connection with
the Offer, whether or not the Offer is completed. If you do not
tender your Preferred Shares, you will retain your rights in
respect of accrued and unpaid dividends.
|
|
|
• Agreements governing our existing indebtedness
(including our Senior Secured Credit Facility and the Notes
Facility) prohibit us from paying dividends or distributions on
the Preferred Shares and Common Shares, and payment of future
dividends or distributions is at the discretion of Emmis’
Board of Directors. We do not expect to pay any dividends or
distributions on the Preferred Shares in the foreseeable future,
whether or not the Offer is completed.
|
||
| See Section 2 (“Purpose of the Offer; Certain Effects of the Offer”). | ||
| Liquidation Preference of Preferred Shares |
• As of December 1, 2011, each Preferred Share
had a liquidation preference of $50.00.
|
|
| See “Risk Factors — The range of purchase prices offered per Preferred Share in the Offer are lower than the liquidation preference per Preferred Share.” | ||
| Appraisal Rights |
• You do not have any appraisal rights in connection
with the Offer.
|
|
| See Section 13 (“Certain Legal Matters; Regulatory Approvals”). | ||
| Market Prices of the Preferred Shares |
• On November 29, 2011, the last trading day prior to
the announcement of the Offer, the reported closing sale
price for the Preferred Shares on the Nasdaq-GS was $14.15.
|
|
|
• During the 12 months prior to November 29,
2011, the highest reported closing sale price for the Preferred
Shares on the Nasdaq-GS was $19.94, and the lowest reported
closing sale price was $12.75.
|
||
| See “Risk Factors — The Final Purchase Price may be higher or lower than the prices at which the Preferred Shares trade on Nasdaq-GS before or after the Expiration Date,” “Market Prices of and Dividends or Distributions on the Preferred Shares” and Section 8 (“Price Range of Preferred Shares; No Payment of Unpaid Dividends or Distributions on Preferred Shares Accepted in the Offer”). |
v
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| Continued Listing of the Preferred Shares on the Nasdaq-GS |
• We do not intend that the Offer will cause the
Preferred Shares to be delisted from the Nasdaq-GS or that the
Offer will be a
“Rule 13e-3
transaction” for purposes of
Rule 13e-3
under the Exchange Act. It is therefore a condition precedent
that we do not determine, in our reasonable judgment that the
Offer and the purchase of the Preferred Shares may
(1) cause the Offer to be a “going-private
transaction” for purposes of
Rule 13e-3
under the Exchange Act or (2) cause the Preferred Shares to
be delisted from the Nasdaq-GS. We intend to use commercially
reasonable efforts to maintain the listing once the Offer
closes, although the future listing status of the Preferred
Shares is subject to the determinations of the Nasdaq-GS and
therefore is beyond our control.
|
|
| See Section 2 (“Purpose of the Offer; Certain Effects of the Offer”). | ||
| Interests of Directors and Executive Officers and Their Participation in the Offer |
• As of December 1, 2011, our directors and
officers as a group (12 persons) beneficially owned an
aggregate of 1,000 Preferred Shares.
|
|
|
• Our directors and executive officers are entitled to
participate in the Offer on the same basis as all other
shareholders.
|
||
|
• No director, executive officer or holder of 10% or
more of the total voting power of the Common Shares of Emmis
intends to tender Preferred Shares into the Offer.
|
||
| See Section 12 (“Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares of the Company”). | ||
| Information Agent |
• BNY Mellon Shareowner Services
|
|
| Depositary |
• BNY Mellon Shareowner Services
|
|
| No Recommendation as to Whether to Tender |
• Our Board of Directors takes no position as to
whether the Final Purchase Price or the other terms of the Offer
are fair to the holders of the Preferred Shares. Our Board of
Directors, with eight directors in favor and one director (who
was the remaining director appointed by the holders of the
Preferred Shares) dissenting:
|
|
|
• has determined that completion of the
Offer would be in the best interests of Emmis. Neither our Board
of Directors nor our management has hired any investment bank or
other third party professional to evaluate the fairness of the
Offer; and
|
||
|
• has authorized us to make the Offer.
|
||
|
• Nevertheless, neither we nor any member of our Board
of Directors or BNY Mellon Shareowner Services, the Information
Agent and the Depositary for the Offer, makes any recommendation
to you as to whether you should tender or refrain from tendering
your Preferred Shares or as to the purchase price or purchase
prices at which you may choose to tender your Preferred Shares.
|
||
| See Section 2 (“Purpose of the Offer; Certain Effects of the Offer”). | ||
| Additional Documentation; Further Information; Assistance |
• Any requests for assistance concerning the Offer may
be directed to the Information Agent at the address set forth on
the back cover of this Offer to Purchase or by telephone toll
free at
(866) 301-0524.
Beneficial owners may also contact their broker, dealer or other
nominee.
|
|
|
• Any requests for additional copies of this Offer to
Purchase and the Letters of Transmittal may be directed to the
Information Agent.
|
You should read this entire Offer to Purchase and the Letter of
Transmittal carefully before deciding whether or not to tender
your Preferred Shares. You should consult with your personal
financial advisor or other legal, tax or investment
professional(s) regarding your individual circumstances.
vi
Table of Contents
QUESTIONS
AND ANSWERS ABOUT THE OFFER
The following are some questions and answers regarding the Offer
that you may have as a holder of Preferred Shares. We urge you
to read carefully this entire Offer to Purchase, including the
section entitled “Risk Factors,” the related Letter of
Transmittal, our Annual Report and Quarterly Reports and the
documents incorporated by reference in this Offer to Purchase.
Additional important information is contained in the remainder
of this Offer to Purchase.
Who is
offering to purchase my Preferred Shares?
The issuer of the Preferred Shares, Emmis Communications
Corporation, an Indiana corporation, is offering to purchase the
Preferred Shares. See Section 1 (“Number of Preferred
Shares; Proration”).
What is
Emmis offering to purchase?
We are offering to purchase up to $6,000,000 in value of
Preferred Shares. See Section 1 (“Number of Preferred
Shares; Proration”).
What is
the purpose of the Offer?
We believe that the Offer is a prudent use of our financial
resources given our business profile, assets and current market
price. The Offer is an element of our overall plan to enhance
shareholder value and rationalize our capital structure. It
reflects our confidence in our future outlook and long-term
value. If successfully completed, the Offer will provide
liquidity to the holders of Preferred Shares at prices that they
may not be able to obtain through market sales. Because we will
be purchasing the Preferred Shares at a discount to their
liquidation preference and without paying any accrued and unpaid
dividends on the Preferred Shares, the Offer will be accretive
to the holders of our common equity.
We believe that the modified “Dutch Auction” tender
offer set forth in this Offer to Purchase represents an
efficient mechanism to provide our shareholders with the
opportunity to tender all or a portion of their Preferred Shares
and thereby receive a return of some or all of their investment
if they so elect. The Offer provides shareholders (particularly
those who, because of the size of their shareholdings, might not
be able to sell their Preferred Shares without potential
disruption to the trading of the Preferred Shares on the
Nasdaq-GS) with an opportunity to obtain liquidity with respect
to all or a portion of their Preferred Shares without potential
disruption to the Preferred Share price.
Assuming that $6,000,000 of Preferred Shares are purchased in
the Offer at a Final Purchase Price of $15.56 per share,
| • | Excluding Preferred Shares in which we have acquired rights to date (including those Preferred Shares whose vote we are currently able to direct), preferred equity will comprise approximately 14% of our total capitalization, down from approximately 20% as of November 30, 2011; | |
| • | We will not have any obligation to pay accrued and unpaid dividends or distributions on any Preferred Shares accepted for purchase pursuant to the Offer, which we estimate will result in the elimination of $3,942,470 of accrued and unpaid dividends; | |
| • | As a result of eliminating a substantial number of Preferred Shares, we estimate that our annual dividend expense, which decreases net income available to common shareholders, will decrease by $1,451,417 per year, which will be partly offset by the interest we will have to pay for amounts drawn under our Notes Facility of $1,377,000 per year in connection with the Offer, compounded on a quarterly basis; and | |
| • | The 1,484,679 Preferred Shares whose vote we are currently able to direct pursuant to agreements we entered into previously with holders of those shares will constitute 66.673% of the issued and outstanding Preferred Shares following the completion of the Offer. We do not intend to cause these Preferred Shares to be tendered in the Offer. |
See Section 2 (“Purpose of the Offer; Certain Effects
of the Offer”), Section 9 (“Source and Amount of
Funds”) and Section 12 (“Interests of Directors
and Executive Officers; Transactions and Arrangements Concerning
Shares of the Company”).
The Offer also provides our shareholders with an efficient way
to sell their Preferred Shares without incurring brokers’
fees or commissions associated with open market sales.
Furthermore, “odd lot holders”, as defined in
Section 1
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(“Number of Preferred Shares; Proration”), who hold
Preferred Shares registered in their names and tender their
Preferred Shares directly to the Depositary and whose Preferred
Shares are purchased in the Offer will avoid any applicable odd
lot discount that might otherwise be payable on sales of their
Preferred Shares. See Section 1 (“Number of Preferred
Shares; Proration”) and Section 2 (“Purpose of
the Offer; Certain Effects of the Offer”).
We do not intend that the Offer will cause the Preferred Shares
to be delisted from the Nasdaq-GS or that the Offer will be a
“going-private transaction” for purposes of
Rule 13e-3
under the Exchange Act. It is therefore a condition precedent
that we do not determine, in our reasonable judgment that the
Offer and the purchase of the Preferred Shares may
(1) cause the Offer to be a
“Rule 13e-3
transaction” for purposes of
Rule 13e-3
under the Exchange Act or (2) cause the Preferred Shares to
be delisted from the Nasdaq-GS. We intend to use commercially
reasonable efforts to maintain the listing once the Offer
closes, although the future listing status of the Preferred
Shares is subject to the determinations of the Nasdaq-GS and
therefore is beyond our control.
How many
Preferred Shares will we purchase in the Offer?
We will purchase up to $6,000,000 in value of Preferred Shares
in the Offer or a lower amount depending on the number of
Preferred Shares properly tendered and not properly withdrawn.
At the maximum Final Purchase Price of $15.56 per Preferred
Share, we could purchase 385,604 Preferred Shares if the Offer
is fully subscribed, which would represent approximately 14.8%
of the issued and outstanding Preferred Shares as of
December 1, 2011. At the minimum Final Purchase Price of
$12.50 per Preferred Share, we could purchase 480,000 Preferred
Shares if the Offer is fully subscribed, which would represent
approximately 18.4% of the issued and outstanding Preferred
Shares as of December 1, 2011. If, based on the Final
Purchase Price, more than $6,000,000 in value of Preferred
Shares are properly tendered and not properly withdrawn, we will
purchase all Preferred Shares tendered at or below the Final
Purchase Price on a pro rata basis, but Preferred Shares
tendered in amounts of less than 100 Preferred Shares (“old
lots”) will be purchased first. We expressly reserve the
right to purchase additional Preferred Shares in the Offer,
subject to applicable law. See Section 1 (“Number of
Preferred Shares; Proration”). The Offer is not conditioned
on any minimum number of Preferred Shares being tendered but is
subject to certain other conditions. See Section 7
(“Conditions of the Offer”).
In accordance with the rules of the SEC, we may increase the
number of Preferred Shares accepted for payment in the Offer by
no more than 2% of the outstanding Preferred Shares without
amending or extending the Offer. See Section 1
(“Number of Preferred Shares; Proration”).
What will
the purchase price for the Preferred Shares be and what will be
the form of payment?
We are conducting the Offer through a procedure commonly called
a modified “Dutch Auction.” This procedure allows you
to select the price, within a price range specified by us, at
which you are willing to sell your Preferred Shares. The price
range for the Offer is $12.50 to $15.56 per Preferred Share. We
will select the single lowest purchase price, not greater than
$15.56 nor less than $12.50 per Preferred Share, that will allow
us to purchase $6,000,000 in value of Preferred Shares at such
price, based on the number of Preferred Shares tendered, or, if
fewer Preferred Shares are properly tendered, all Preferred
Shares that are properly tendered and not properly withdrawn. We
will purchase all Preferred Shares at the Final Purchase Price,
even if you have selected a purchase price lower than the Final
Purchase Price, but we will not purchase any Preferred Shares
tendered at a price above the Final Purchase Price.
If you wish to maximize the chance that we will purchase your
Preferred Shares, you should check the box in the section
entitled “Preferred Shares Tendered At Price
Determined Under The Offer” in the section of the Letter of
Transmittal captioned “Price (In Dollars) Per Preferred
Share At Which Preferred Shares Are Being Tendered,”
indicating that you will accept the Final Purchase Price. You
should understand that this election may have the effect of
lowering the Final Purchase Price and could result in your
Preferred Shares being purchased at the minimum price of $12.50
per Preferred Share, a price that is below the last reported
sale price of the Preferred Shares on the Nasdaq-GS on November
29, 2011, the last full trading day prior to announcement of the
Offer, which was $14.15 per Preferred Share, and could be below
the last reported sale price of the Preferred Shares on the
Nasdaq-GS on the Expiration Date.
If we purchase your Preferred Shares in the Offer, we will pay
you the Final Purchase Price in cash, less any applicable
withholding taxes and without interest, promptly after the
Expiration Date. Under no circumstances will we pay
viii
Table of Contents
interest on the Final Purchase Price, even if there is a delay
in making payment. See the Introduction, Section 1
(“Number of Preferred Shares; Proration”) and
Section 3 (“Procedures for Tendering Preferred
Shares”).
How will
we pay for the Preferred Shares?
The maximum value of Preferred Shares purchased in the Offer
will be $6,000,000. We expect that the maximum aggregate cost of
this purchase, including all fees and expenses applicable to the
Offer, to be approximately $6,500,000. We intend to pay for the
Preferred Shares with cash borrowed under our Notes Facility.
See Section 9 (“Source and Amount of Funds”).
How long
do I have to tender my Preferred Shares?
You may tender your Preferred Shares until the Offer expires.
The Offer will expire on Friday, December 30, 2011, at
5:00 p.m., New York City Time, unless we extend the Offer.
See Section 1 (“Number of Preferred Shares;
Proration”). We may choose to extend the Offer at any time
and for any reason. We cannot assure you, however, that we will
extend the Offer or, if we extend it, for how long. See
Section 1 (“Number of Preferred Shares;
Proration”) and Section 15 (“Extension of the
Offer; Termination; Amendment”). If a broker, dealer,
commercial bank, trust company or other nominee holds your
Preferred Shares, it may have an earlier deadline for accepting
the Offer. We urge you to contact the broker, dealer, commercial
bank, trust company or other nominee that holds your Preferred
Shares to find out its deadline. See Section 3
(“Procedure for Tendering Preferred Shares”).
Can the
Offer be extended, amended or terminated, and if so, under what
circumstances?
Yes. We can extend or amend the Offer in our sole discretion. If
we extend the Offer, we may delay the acceptance of any
Preferred Shares that have been tendered. See Section 15
(“Extension of the Offer; Termination; Amendment”). We
can terminate the Offer under certain circumstances. See
Section 7 (“Conditions of the Offer”).
How will
I be notified if you extend the Offer or amend the terms of the
Offer?
If we extend the Offer, we will issue a press release not later
than 9:00 a.m., New York City Time, on the first business
day after the previously scheduled Expiration Date. We will
announce any amendment to the Offer by making a public
announcement of the amendment. If we extend the Offer, you may
withdraw your Preferred Shares until the Expiration Date, as
extended. See Section 15 (“Extension of the Offer;
Termination; Amendment”).
Are there
any conditions to the Offer?
Yes. Our obligation to accept for payment and pay for your
tendered Preferred Shares depends upon a number of conditions
that must be satisfied in our reasonable judgment or waived by
us on or prior to the Expiration Date, including, but not
limited to:
| • | the satisfaction of all conditions precedent under the Notes Facility for the borrowing of aggregate proceeds under the Notes Facility that are sufficient to fund the purchase of the Preferred Shares in the Offer and to pay all related fees and expenses; | |
| • | the closing sale price of the Preferred Shares on the Nasdaq-GS has not exceeded $15.56 for any five or more trading days on or after November 30, 2011 and on or prior to the Expiration Date; | |
| • | there has been no action threatened, pending or taken, including any settlement, or any approval withheld, or any statute, rule, regulation, judgment, order, administrative action, investigation, arbitration, litigation, suit or other civil or criminal proceeding, or any other decision, judgment, writ, decree, award or other determination of any government authority, audit, review, ruling, other action or injunction threatened, invoked, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or us or any of our subsidiaries, including any settlement, by any court, government or governmental, regulatory or administrative |
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| authority, agency or tribunal, domestic, foreign or supranational, that, in our reasonable judgment, seeks to or could directly or indirectly: |
| • | make illegal, or delay or otherwise directly or indirectly restrain, prohibit or otherwise affect the consummation of the Offer, the acquisition of some or all of the Preferred Shares pursuant to the Offer or otherwise relates in any manner to the Offer; | |
| • | make the acceptance for payment of, or payment for, some or all of the Preferred Shares illegal or otherwise restrict or prohibit consummation of the Offer; | |
| • | delay or restrict our ability, or render us unable, to accept for payment or pay for some or all of the Preferred Shares to be purchased pursuant to the Offer; or | |
| • | materially and adversely affect our or our subsidiaries’ or our affiliates’ business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or otherwise materially impair our ability to purchase some or all of the Preferred Shares pursuant to the Offer; |
| • | no change (or any condition, event or development involving a prospective change) shall have occurred in the business, properties, assets, liabilities, capitalization, shareholders’ equity, income, condition (financial or otherwise), operations, licenses, franchises, permits, permit applications, results of operations or prospects of the Company or any of its subsidiaries, which, in our reasonable judgment, is or may be materially adverse, or we will have become aware of any fact which, in our reasonable judgment, has or may have material adverse significance with respect to the Company or any of its subsidiaries; | |
| • | no default or event of default has occurred, is continuing to occur, or would occur as a result of the consummation of the Offer, under either the Notes Facility, or the Senior Secured Credit Facility; | |
| • | no general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market; | |
| • | no decrease of more than 10% in the market price of the Preferred Shares or in the general level of market prices for equity securities in the United States of the New York Stock Exchange Index, the Dow Jones Industrial Average, the NASDAQ Global Market Composite Index or Standard & Poor’s Composite Index of 500 Industrial Companies, in each case measured from the close of trading on November 29, 2011, the last trading day prior to announcement of the Offer; | |
| • | no commencement or declaration of a war, armed hostilities or other similar national or international calamity, including, but not limited to, an act of terrorism, directly or indirectly involving the United States, on or after December 1, 2011; | |
| • | no material escalation of any war or armed hostilities which had commenced prior to December 1, 2011; | |
| • | no change in the general political, market, economic or financial conditions, domestically or internationally, that is reasonably likely to materially and adversely affect our business or the trading in the Preferred Shares; or | |
| • | any approval, permit, authorization, favorable review, consent or other action of any domestic or foreign governmental, administrative or regulatory agency, authority, tribunal or third party required to be obtained in connection with the Offer shall not have been obtained on terms satisfactory to us in our reasonable discretion, and regardless of the circumstances (including any action or inaction by us or any of our affiliates) giving rise to any such condition; or | |
| • | we shall not have determined, in our reasonable judgment, that the consummation of the Offer and the purchase of the Preferred Shares may (1) cause the Offer to be a “Rule 13e-3 transaction” for purposes of Rule 13e-3 under the Exchange Act or (2) cause the Preferred Shares to be delisted from the Nasdaq-GS. |
For a more detailed discussion of the conditions to the Offer,
please see Section 7 (“Conditions of the Offer”).
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Table of Contents
How do I
tender my Preferred Shares?
If you want to tender all or part of your Preferred Shares, you
must do one of the following before 5:00 p.m., New York
City Time, on Friday, December 30, 2011, or any later time and
date to which the Offer may be extended:
| • | If you hold certificates registered in your own name, complete and sign a Letter of Transmittal according to its instructions, and deliver it, together with any required signature guarantees, the certificates for your Preferred Shares and any other documents required by the Letter of Transmittal to the Depositary at the address appearing on the back cover page of this Offer to Purchase; | |
| • | If your Preferred Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and request that the nominee tender your Preferred Shares for you; or | |
| • | If you are an institution participating in the Book-Entry Transfer Facility, tender your Preferred Shares according to the procedure for book-entry transfer described in Section 3 (“Procedures for Tendering Preferred Shares”). |
If you want to tender your Preferred Shares, but (a) the
certificates for your Preferred Shares are not immediately
available or cannot be delivered to the Depositary by the
Expiration Date; (b) you cannot comply with the procedure
for book-entry transfer by the Expiration Date; or (c) your
other required documents cannot be delivered to the Depositary
by the Expiration Date, you can still tender your Preferred
Shares if you comply with the guaranteed delivery procedures
described in Section 3 (“Procedures for Tendering
Preferred Shares”).
We are not making the Offer to, and will not accept any tendered
Preferred Shares from, shareholders in any jurisdiction where it
would be illegal to do so. However, we may, at our discretion,
take any actions necessary for us to make the Offer to
shareholders in any such jurisdiction.
You may contact the Information Agent or your broker, dealer,
commercial bank, trust company or other nominee for assistance.
The contact information for the Information Agent is set forth
on the back cover of this Offer to Purchase. See Section 3
(“Procedures for Tendering Preferred Shares”) and the
Instructions to the Letter of Transmittal.
Once I
have tendered Preferred Shares in the Offer, may I withdraw my
tendered Preferred Shares?
Yes. You may withdraw any Preferred Shares you have tendered at
any time before 5:00 p.m., New York City Time, on Friday,
December 30, 2011, or any later Expiration Date, if the Offer is
extended. If after 5:00 p.m., New York City Time, on
Monday, January 30, 2012 (40 business days after the
commencement of the Offer) we have not accepted for payment the
Preferred Shares you have tendered to us, you may also withdraw
your Preferred Shares at any time thereafter. See Section 4
(“Withdrawal Rights”).
How do I
withdraw Preferred Shares I previously tendered?
To properly withdraw Preferred Shares, you must deliver on a
timely basis a written notice of your withdrawal to the
Depositary at one of the addresses appearing on the back cover
of this Offer to Purchase. Your notice of withdrawal must
specify your name, the number of Preferred Shares to be
withdrawn and the name of the registered holder of the Preferred
Shares. Some additional requirements apply if the certificates
for Preferred Shares to be withdrawn have been delivered to the
Depositary or if your Preferred Shares have been tendered under
the procedure for book-entry transfer set forth in
Section 3 (“Procedures for Tendering Preferred
Shares”).
In what
order will you purchase the tendered Preferred Shares?
We will purchase Preferred Shares on the following basis:
| • | first, we will purchase all Preferred Shares properly tendered and not properly withdrawn by any odd lot holder (holders of “odd lots” of less than 100 Preferred Shares) who (i) tenders all Preferred Shares owned beneficially or of record by such odd lot holder at a price at or below the Final Purchase Price (tenders of less than all of the Preferred Shares owned by such odd lot holder will not qualify for this preference); and (ii) completes the box entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; provided, however that if the application of such odd lot priority would result in our non-compliance with the listing standards of the Nasdaq-GS, we will not apply such priority; |
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| • | second, after the purchase of all of the Preferred Shares properly tendered by odd lot holders, subject to the conditional tender provisions described in Section 6 (“Conditional Tender of Preferred Shares,” whereby a holder may specify a minimum number of such holder’s Preferred Shares that must be purchased if any such Preferred Shares are purchased), we will purchase all other Preferred Shares properly tendered at or below the Final Purchase Price on a pro rata basis with appropriate adjustment to avoid purchases of fractional Preferred Shares; and | |
| • | third, only if necessary to permit us to purchase $6,000,000 in value of Preferred Shares (or such greater amount as we may elect to pay, subject to applicable law), we will purchase Preferred Shares conditionally tendered (for which the condition was not initially satisfied) at or below the Final Purchase Price, by random lot, to the extent feasible. To be eligible for purchase by random lot, shareholders whose Preferred Shares are conditionally tendered must have tendered all of their Preferred Shares. |
Therefore, it is possible that we will not purchase all of the
Preferred Shares that you tender even if you tender them at or
below the Final Purchase Price. See Section 1 (“Number
of Preferred Shares; Proration”).
What does
the Board of Directors think of the Offer?
Our Board of Directors, with eight directors in favor and one
director (who was the remaining director appointed by the
holders of the Preferred Shares) dissenting, has authorized us
to make the Offer. However, neither we nor any member of our
Board of Directors or BNY Mellon Shareowner Services, the
Information Agent and the Depositary for the Offer, makes any
recommendation to you as to whether you should tender or refrain
from tendering your Preferred Shares or as to the purchase price
or purchase prices at which you may choose to tender your
Preferred Shares. Neither we nor any member of our Board of
Directors, the Information Agent or the Depositary has
authorized any person to make any recommendation with respect to
the Offer. You must make your own decision as to whether to
tender your Preferred Shares and, if so, how many Preferred
Shares to tender and the purchase price or purchase prices at
which you will tender them. In doing so, you should consult your
own financial and tax advisors, and read carefully and evaluate
the information in this Offer to Purchase and in the related
Letter of Transmittal, including our reasons for making the
Offer. See Section 2 (“Purpose of the Offer; Certain
Effects of the Offer”). You should discuss whether to
tender your Preferred Shares with your broker or other financial
or tax advisors.
If I
decide not to tender, how will the Offer affect my Preferred
Shares?
Each holder of Preferred Shares must make his or her own
decision as to whether he or she wants to tender his or her
Preferred Shares in the Offer. Holders of Preferred Shares are
under no obligation to tender their Preferred Shares, and our
obligations to the holders of Preferred Shares whose Preferred
Shares are not purchased pursuant to the Offer will remain
unchanged. Holders of Preferred Shares who decide not to tender
will own a greater percentage interest in the outstanding
Preferred Shares following the consummation of the Offer. These
shareholders will also continue to bear the risks associated
with owning the Preferred Shares, including our inability to pay
dividends or distributions on our Preferred Shares, the
increased amount of our indebtedness under the Notes Facility as
a result of the completion of the Offer, and other risks
resulting from our purchase of Preferred Shares in the Offer. In
addition, the Preferred Shares, with respect to distributions
upon the liquidation,
winding-up
and dissolution of the Company, rank junior to any indebtedness
of the Company (including any indebtedness of the Company under
its Senior Secured Credit Facility and the Notes Facility) and
holders of Preferred Shares will generally not be entitled to
receive any payments in respect of their Preferred Shares prior
to the satisfaction of the claims of the Company’s lenders.
Assuming that $6,000,000 of Preferred Shares are purchased in
the Offer at a Final Purchase Price of $15.56 per share,
the 1,484,679 Preferred Shares whose vote we are currently able
to direct pursuant to agreements we entered into previously with
holders of those shares will constitute 66.673% of the issued
and outstanding Preferred Shares following the completion of the
Offer. We do not intend to cause these Preferred Shares to be
tendered in the Offer.
Following the completion of the Offer, we may continue to engage
in discussions and negotiations with holders of Preferred Shares
with respect to, among other things, acquiring their Preferred
Shares or entering into voting or other arrangements with such
holders. Although our Board of Directors has not made any
determinations with respect to making amendments to the terms of
the Preferred Shares, if we are able to obtain the ability to
direct the vote of at least
662/3%
of the issued and outstanding Preferred Shares following the
completion of the Offer, we may elect to, among other things,
amend various provisions applicable to the Preferred Shares,
including but not limited to: (i) reducing or eliminating
the
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liquidation preference of the Preferred Shares,
(ii) removing the ability of the holders of Preferred
Shares to require the Company to repurchase all or any portion
of such holders’ Preferred Shares upon a change of control
or certain going-private transactions, (iii) removing the
Company’s obligation to pay to holders of Preferred Shares
the amount of dividends in respect of their Preferred Shares
that are currently accrued and unpaid, (iv) changing the
designation of the Preferred Shares from “Cumulative”
to “Non-Cumulative” such that dividends or
distributions on the Preferred Shares shall cease to accrue,
(v) eliminating the rights of the holders of Preferred
Shares to nominate directors to the Company’s Board of
Directors as a result of arrearages in dividends, and
(vi) eliminating the restrictions on the Company’s
ability to pay dividends or make distributions on its Common
Shares prior to paying accrued and unpaid dividends or
distributions on Preferred Shares. If the above-described
amendments are made, the market value of the Preferred Shares
remaining outstanding may be materially and adversely affected,
and we may engage in various actions that are currently
prohibited or limited by the various provisions of the Preferred
Shares. See Section 2 (“Purpose of the Offer; Certain
Effects of the Offer”), Section 9 (“Source and
Amount of Funds”) and Section 12 (“Interests of
Directors and Executive Officers; Transactions and Arrangements
Concerning Shares of the Company”).
Following
the Offer, will the Preferred Shares continue to trade
publicly?
We do not intend that the Offer will cause the Preferred Shares
to be delisted from the Nasdaq-GS or that the Offer will be a
“Rule 13e-3
transaction” for purposes of
Rule 13e-3
under the Exchange Act. It is therefore a condition precedent
that we do not determine, in our reasonable judgment that the
Offer and the purchase of the Preferred Shares may
(1) cause the Offer to be a “going-private
transaction” for purposes of
Rule 13e-3
under the Exchange Act or (2) cause the Preferred Shares to
be delisted from the Nasdaq-GS. We intend to use commercially
reasonable efforts to maintain the listing once the Offer
closes, although the future listing status of the Preferred
Shares is subject to the determinations of the Nasdaq-GS and
therefore is beyond our control. See Section 2
(“Purpose of the Offer; Certain Effects of the Offer”).
When and
how will you pay me for the Preferred Shares I
tender?
We will pay the Final Purchase Price to the seller, in cash,
less applicable withholding taxes and without interest, for the
Preferred Shares we purchase promptly after the Expiration Date.
We will announce the preliminary results of the Offer, including
price and preliminary information about any expected proration,
on the business day following the Expiration Date. We do not
expect, however, to announce the final results of any proration
or the Final Purchase Price and begin paying for tendered
Preferred Shares until at least four business days after the
Expiration Date. We will pay for the Preferred Shares accepted
for purchase by depositing the aggregate purchase price with the
Depositary, promptly after the Expiration Date. The Depositary
will act as your agent and will transmit to you the payment for
all of your Preferred Shares accepted for payment. See
Section 1 (“Number of Preferred Shares;
Proration”) and Section 5 (“Purchase of Preferred
Shares and Payment of Purchase Price”).
What is
the recent market price of my Preferred Shares?
On November 29, 2011, the last trading day prior to the
announcement of the Offer, the reported closing sale price for
the Preferred Shares on the Nasdaq-GS was $14.15. During the
12 months prior to November 29, 2011, the highest reported
closing sale price for the Preferred Shares on the Nasdaq-GS was
$19.94, and the lowest reported closing sale price was $12.75.
You are strongly urged to obtain current market quotations for
the Preferred Shares before deciding whether and at what
purchase price or purchase prices to tender your Preferred
Shares. See Section 8 (Price Range of Preferred Shares; No
Payment of Unpaid Dividends on Preferred Shares Accepted in
the Offer”).
Will I
receive accrued and unpaid dividends or distributions on my
Preferred Shares?
We have not declared a dividend on our Preferred Shares since
October 15, 2008. As of December 1, 2011, dividends in
arrears totaled $26,709,744, or $10.22 per Preferred Share.
Agreements governing Emmis’ existing indebtedness
(including our Senior Secured Credit Facility and the Notes
Facility) prohibit us from paying dividends or distributions on
the Preferred Shares and Common Shares, and payment of future
dividends or distributions is at the discretion of Emmis’
Board of Directors. We do not expect to pay any dividends or
distributions on the Preferred Shares in the foreseeable future,
whether or not the Offer is completed.
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None of the Final Purchase Price will be allocated to
accumulated and unpaid dividends or distributions, and no
dividend will be paid on the Preferred Shares in connection with
the Offer, whether or not the Offer is completed. Tendering
holders of the Preferred Shares that are purchased in the Offer
will no longer have any rights in respect of the accumulated and
unpaid dividends or distributions on those Preferred Shares
purchased by us. See Section 8 (“Price Range of
Preferred Shares; No Payment of Unpaid Dividends or
Distributions on Preferred Shares Accepted in the
Offer”).
Will I
have to pay brokerage commissions if I tender my Preferred
Shares?
If you are a registered shareholder and you tender your
Preferred Shares directly to the Depositary, you will not incur
any brokerage commissions. If you hold Preferred Shares through
a broker, dealer, commercial bank, trust company or other
nominee, we urge you to consult your broker, dealer, commercial
bank, trust company or other nominee to determine whether any
transaction costs are applicable. See the Introduction and
Section 3 (“Procedures for Tendering Preferred
Shares”).
Will I
have to pay stock transfer tax if I tender my Preferred
Shares?
If you instruct the Depositary in the Letter of Transmittal to
make the payment for the Preferred Shares to the registered
holder, you will not incur any stock transfer tax. See
Section 5 (“Purchase of Preferred Shares and Payment
of Purchase Price”).
What are
the United States federal income tax consequences if I tender my
Preferred Shares?
Generally, if you are a U.S. Holder (as defined in
Section 14 (“Material United States Federal Income Tax
Consequences”), your receipt of cash from us in exchange
for the Preferred Shares you tender will be a taxable
transaction for United States federal income tax purposes. The
cash you receive for your tendered Preferred Shares will
generally be treated for United States federal income tax
purposes either as consideration received in respect of a sale
or exchange of the Preferred Shares purchased by us or as a
distribution from us in respect of our stock. See
Section 14 (“Material United States Federal Income Tax
Consequences”) for a more detailed discussion of the tax
treatment of the Offer. We urge you to consult your own tax
advisor as to the particular tax consequences to you of the
Offer. If you are a
non-U.S. Holder
(as defined in Section 14 (“Material United States
Federal Income Tax Consequences”)) , because it is unclear
whether the cash you receive in connection with the Offer will
be treated (i) as consideration received in respect of a
sale or exchange of the Preferred Shares purchased by us or
(ii) as a distribution from us in respect of our stock, the
Company intends to treat such payment as a dividend distribution
for withholding tax purposes. Accordingly, if you are a
non-U.S. Holder,
you will be subject to withholding tax on payments to you at a
rate of 30% of the gross proceeds paid, unless you establish an
entitlement to a reduced or zero rate of withholding tax by
timely completing, under penalties of perjury, the applicable
Form W-8.
See Section 14 (“Material United Sates Federal Income
Tax Consequences”) for a more detailed discussion of the
tax treatment of the Offer.
Non-U.S. Holders
are urged to consult their tax advisors regarding the
application of United States federal income tax withholding and
backup withholding, including eligibility for a withholding tax
reduction or exemption and the refund procedure.
Who
should I contact with questions about the Offer?
The Information Agent can help answer your questions. The
Information Agent is BNY Mellon Shareowner Services. The
Information Agent’s contact information is set forth below.
BNY
Mellon Shareowner Services
480 Washington Boulevard, 27th Floor
Jersey City, NJ 07310
480 Washington Boulevard, 27th Floor
Jersey City, NJ 07310
Call Toll
Free:
(866) 301-0524
Call Collect: (201) 680-6579
Call Collect: (201) 680-6579
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RISK
FACTORS
You should carefully consider the risks and uncertainties
described throughout this Offer to Purchase, including those
described below, and the risk factors set forth in our Annual
Report on
Form 10-K
and Quarterly Reports on
Form 10-Q
regarding the risks of investment in our securities, before you
decide whether to tender your Preferred Shares.
No
party has made any determination that the Offer is fair to
holders of Preferred Shares.
Neither we, nor any member of our Board of Directors, the
Information Agent, or the Depositary are making a recommendation
as to whether holders of Preferred Shares should tender their
Preferred Shares in the Offer. We have not retained, and do not
intend to retain, any unaffiliated representative to act solely
on behalf of the holders of Preferred Shares for purposes of
negotiating the Offer or preparing a report concerning the
fairness of the Offer. You must make your own independent
decision regarding your participation in the Offer.
The
range of purchase prices offered per Preferred Share in the
Offer are lower than the liquidation preference per Preferred
Share.
The range of purchase prices being offered per Preferred Share
in the Offer is lower than the stated liquidation preference per
Preferred Share. Each Preferred Share has a liquidation
preference of $50.00. In this Offer, we are offering $12.50 to
$15.56 per Preferred Share and none of the Final Purchase Price
will be allocated to accrued and unpaid dividends or
distributions.
The
purchase prices offered in the Offer are not dependent on or
related to the market prices of the Preferred Shares, and could
be lower than the sales prices of the Preferred Shares on the
Nasdaq-GS on, prior to or after the Expiration
Date.
The range of purchase prices offered per Preferred Share in the
Offer are fixed, and thus are not dependent on or related to the
market prices of the Preferred Share as quoted on the Nasdaq-GS.
As a result, the market prices of Preferred Shares may be higher
or lower than the purchase prices at any time on, prior to or
after the expiration date, and the purchase prices will not be
subject to any adjustment related to the fluctuations in market
prices of Preferred Shares. If you tender your Preferred Shares
for purchase, the Offer is successfully completed and your
Preferred Shares are accepted for purchase, you may receive more
or less consideration than you would have received if you had
sold your Preferred Shares in the open market or in an
alternative transaction.
Holders
of Preferred Shares accepted for purchase in the Offer will not
be entitled to receive any dividends or distributions with
respect to such Preferred Shares.
If we accept for purchase any Preferred Shares that you tender
pursuant to the Offers, you will not be entitled to receive any
dividends or distributions with respect to such Preferred
Shares. No dividends or distributions will be paid on the
Preferred Shares in connection with the Offer, whether or not
the Offer is completed.
If the
Offer is successful, and you do not tender your Preferred
Shares, or not all of the Preferred Shares you tender are
accepted for purchase because of proration, the value of your
remaining Preferred Shares may decline.
Successful completion of the Offer will significantly reduce the
number of outstanding Preferred Shares and the liquidity and,
therefore, the market price of your remaining Preferred Shares
may be adversely affected. See also “Risk
Factors — If we are able to direct the vote of at
least
662/3%
of the outstanding Preferred Shares after the completion of the
Offer, we may amend certain terms of the Preferred Shares.”
No
dividends or distributions will be paid on the Preferred Shares
in connection with the Offer or in the foreseeable
future.
If any conditions of the Offer are not satisfied, we will be
under no obligation to purchase the Preferred Shares. No
dividend will be paid on the Preferred Shares in connection with
the Offer, whether or not the Offer is completed. If you do not
tender your Preferred Shares, you will retain your rights in
respect of accrued and unpaid dividends or distributions.
Agreements governing our existing indebtedness (including our
Senior Secured Credit Facility and the Notes Facility)
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prohibit us from paying dividends or distributions on the
Preferred Shares and Common Shares, and we do not expect to pay
any dividends or distributions on the Preferred Shares in the
foreseeable future, whether or not the Offer is completed.
We may
acquire Preferred Shares other than through the Offer in the
future.
From time to time in the future, to the extent permitted by
applicable law, Emmis may acquire Preferred Shares that remain
outstanding, whether or not the Offer is consummated, through
tender offers, exchange offers, redemptions, open-market
purchases, privately negotiated transactions or otherwise, upon
such terms and at such prices as we or our affiliates may
determine, which may be more or less than the price to be paid
pursuant to the Offer and could be for cash or other
consideration. There can be no assurance as to which, if any, of
these alternatives or combinations thereof we or our affiliates
will choose to pursue in the future.
If we
are able to direct the vote of at least
662/3%
of the outstanding Preferred Shares after the completion of the
Offer, we may amend certain terms of the Preferred
Shares.
Assuming that $6,000,000 of Preferred Shares are purchased in
the Offer at a Final Purchase Price of $15.56 per share, the
1,484,679 Preferred Shares whose vote we are currently able to
direct pursuant to agreements we entered into previously with
holders of those shares will constitute 66.673% of the issued
and outstanding Preferred Shares following the completion of the
Offer. We do not intend to cause these Preferred Shares to be
tendered in the Offer.
Following the completion of the Offer, we may continue to engage
in discussions and negotiations with holders of Preferred Shares
with respect to, among other things, acquiring their Preferred
Shares or entering into voting or other arrangements with such
holders. Although our Board of Directors has not made any
determinations with respect to making amendments to the terms of
the Preferred Shares, if we are able to obtain the ability to
direct the vote of at least
662/3%
of the issued and outstanding Preferred Shares following the
completion of the Offer, we may elect to, among other things,
amend various provisions applicable to the Preferred Shares,
including but not limited to: (i) reducing or eliminating
the liquidation preference of the Preferred Shares,
(ii) removing the ability of the holders of Preferred
Shares to require the Company to repurchase all or any portion
of such holders’ Preferred Shares upon a change of control
or certain going-private transactions, (iii) removing the
Company’s obligation to pay to holders of Preferred Shares
the amount of dividends in respect of their Preferred Shares
that are currently accrued and unpaid, (iv) changing the
designation of the Preferred Shares from “Cumulative”
to “Non-Cumulative” such that dividends or
distributions on the Preferred Shares shall cease to accrue,
(v) eliminating the rights of the holders of Preferred
Shares to nominate directors to the Company’s Board of
Directors as a result of arrearages in dividends, and
(vi) eliminating the restrictions on the Company’s
ability to pay dividends or make distributions on its Common
Shares prior to paying accrued and unpaid dividends or
distributions on Preferred Shares. If the above-described
amendments are made, the market value of the Preferred Shares
remaining outstanding may be materially and adversely affected,
and we may engage in various actions that are currently
prohibited or limited by the various provisions of the Preferred
Shares. See Section 2 (“Purpose of the Offer; Certain
Effects of the Offer”), Section 9 (“Source and
Amount of Funds”) and Section 12 (“Interests of
Directors and Executive Officers; Transactions and Arrangements
Concerning Shares of the Company”).
If the above-described amendments are made, the market value of
the Preferred Shares remaining outstanding may be materially and
adversely affected, and we may engage in various actions that
are currently prohibited or limited by the various provisions of
the Preferred Shares.
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FORWARD-LOOKING
STATEMENTS
This Offer to Purchase and other documents we file with the SEC
contain forward-looking statements that are based on current
expectations, estimates, forecasts and projections and our
management’s belief and assumptions about us, our future
performance and our business. In addition, we, or others on our
behalf, may make “forward-looking statements” in press
releases or written statements, or in our communications and
discussions with investors and analysts in the normal course of
business through meetings, webcasts, phone calls and conference
calls. Such words as “expect,” “anticipate,”
“will,” “look,” “outlook,”
“could,” “target,” “project,”
“intend,” “plan,” “believe,”
“seek,” “estimate,” “should,”
“may,” “assume,” and “continue,”
as well as variations of such words and similar expressions are
intended to identify such forward-looking statements. Such
statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of the company to be materially different from any
future result, performance or achievement expressed or implied
by such forward-looking statement. We describe our respective
risks, uncertainties and assumptions that could affect the
outcome or results of operations in the “Risk Factors”
section of our Annual Report on
Form 10-K
for the fiscal year ended February 28, 2011, and the
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section of our
Quarterly Reports filed on
Form 10-Q
for the quarters ended May 31, 2011 and August 31,
2011. The accuracy of our expectations and predictions is also
subject to the following risks and uncertainties:
| • | our ability to complete the Offer; | |
| • | the price and time at which we may make any additional Preferred Share repurchases following completion of Offer, the number of Preferred Shares acquired in such repurchases and the terms, timing, costs and interest on any indebtedness to fund such repurchases; | |
| • | our increased leverage incurred to purchase Preferred Shares in the Offer and to pay all related fees and expenses, which could have material adverse effects on us, including, but not limited to, those discussed under the subsection entitled “Summary of the Note Purchase Agreement” in Section 9 (“Source and Amount of Funds”); and | |
| • | changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of United States or international lending, capital and financing markets; | |
| • | fluctuations in the demand for advertising and demand for different types of advertising media; | |
| • | our ability to service our outstanding debt; | |
| • | increased competition in our markets and the broadcasting industry; | |
| • | our ability to attract and secure programming, on-air talent, writers and photographers; | |
| • | inability to obtain (or to obtain timely) any necessary approvals for purchase or sale transactions or to complete the transactions for other reasons generally beyond our control; | |
| • | increases in the costs of programming, including on-air talent; | |
| • | inability to grow through suitable acquisitions; | |
| • | changes in audience measurement systems; | |
| • | new or changing regulations of the Federal Communications Commission or other governmental agencies; | |
| • | competition from new or different technologies; | |
| • | war, terrorist acts or political instability; and | |
| • | other factors mentioned in documents filed by the Company with the Securities and Exchange Commission. |
We have based our forward-looking statements on our
management’s beliefs and assumptions based on information
available to our management at the time the statements are made.
We caution you that actual outcomes and results may differ
materially from what is expressed, implied or forecast by our
forward-looking statements.
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INTRODUCTION
To the holders of our Preferred Shares:
We are offering to purchase up to $6,000,000 in value of shares
of our 6.25% Series A Cumulative convertible Preferred
Stock, $0.01 par value per share (the “Preferred
Shares”), at a price not greater than $15.56 nor less than
$12.50 per Preferred Share, to the seller in cash, less any
applicable withholding taxes and without interest, upon the
terms and subject to the conditions described in this Offer to
Purchase and in the related Letter of Transmittal (which
together, as they may be amended or supplemented from time to
time, constitute the “Offer”).
Upon the terms and subject to the conditions of the Offer, we
will determine a single per Preferred Share price that we will
pay for Preferred Shares properly tendered and not properly
withdrawn from the Offer, taking into account the total number
of Preferred Shares tendered and the prices specified by
tendering shareholders. We will select the lowest single
purchase price, not greater than $15.56 nor less than $12.50 per
Preferred Share, that will allow us to purchase $6,000,000 in
value of Preferred Shares, or a lower amount depending on the
number of Preferred Shares properly tendered and not properly
withdrawn (such purchase price, the “Final Purchase
Price”). If, based on the Final Purchase Price, Preferred
Shares having an aggregate value of less than $6,000,000 are
properly tendered and not properly withdrawn, we will buy all
Preferred Shares properly tendered and not properly withdrawn.
All Preferred Shares acquired in the Offer will be acquired at
the Final Purchase Price, including those Preferred Shares
tendered at a price lower than the Final Purchase Price. Only
Preferred Shares properly tendered at prices at or below the
Final Purchase Price, and not properly withdrawn, will be
purchased. Nevertheless, because of the “odd lot”
priority, proration and conditional tender offer provisions
described in this Offer to Purchase, all of the Preferred Shares
tendered at or below the Final Purchase Price may not be
purchased if, based on the Final Purchase Price, Preferred
Shares having an aggregate value in excess of $6,000,000 are
properly tendered and not properly withdrawn. However, if the
application of the “odd lot” priority would result in
our non-compliance with the listing standards of the Nasdaq-GS,
we will not apply such priority. Preferred Shares not purchased
in the Offer will be returned at our expense to the tendering
shareholders promptly following the Expiration Date. Subject to
applicable law, we reserve the right, in our sole discretion, to
change the per Preferred Share purchase price range and to
increase or decrease the value of Preferred Shares sought in the
Offer. In accordance with the rules of the Securities and
Exchange Commission (the “SEC”), we may increase the
number of Preferred Shares accepted for payment in the Offer by
no more than 2% of the outstanding Preferred Shares without
amending or extending the Offer. See Section 1
(“Number of Preferred Shares; Proration”).
None of the Final Purchase Price will be allocated to
accumulated and unpaid dividends, and no dividend or
distribution will be paid on the Preferred Shares in connection
with the Offer. Tendering holders of the Preferred Shares that
are purchased in the Offer will no longer have any rights in
respect to the accumulated and unpaid dividends or distributions
on those Preferred Shares purchased by us.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF
PREFERRED SHARES BEING TENDERED. THE OFFER IS, HOWEVER,
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7
(“CONDITIONS OF THE OFFER”).
OUR BOARD OF DIRECTORS, WITH EIGHT DIRECTORS IN FAVOR AND ONE
DIRECTOR (WHO WAS THE REMAINING DIRECTOR APPOINTED BY THE
HOLDERS OF THE PREFERRED SHARES) DISSENTING, HAS AUTHORIZED US
TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR ANY MEMBER OF OUR
BOARD OF DIRECTORS OR BNY MELLON SHAREOWNER SERVICES, THE
INFORMATION AGENT AND THE DEPOSITARY FOR THE OFFER, MAKES ANY
RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR PREFERRED SHARES OR AS TO THE PURCHASE
PRICE OR PURCHASE PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR
PREFERRED SHARES. NEITHER WE NOR ANY MEMBER OF OUR BOARD OF
DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY HAS
AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION WITH RESPECT TO
THE OFFER. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO
TENDER YOUR PREFERRED SHARES AND, IF SO, HOW MANY PREFERRED
SHARES TO TENDER AND THE PURCHASE PRICE OR PURCHASE PRICES
AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSULT
YOUR OWN FINANCIAL AND TAX ADVISORS, AND READ CAREFULLY AND
EVALUATE THE INFORMATION IN THIS OFFER TO PURCHASE AND IN
Table of Contents
THE RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR
MAKING THE OFFER. SEE SECTION 2 (“PURPOSE OF THE
OFFER; CERTAIN EFFECTS OF THE OFFER”).
We will pay all reasonable
out-of-pocket
fees and expenses incurred in connection with the Offer by the
Information Agent and the Depositary. See Section 16
(“Fees and Expenses”).
As of December 1, 2011, we had approximately 2,612,420
issued and outstanding Preferred Shares. At the maximum Final
Purchase Price of $15.56 per Preferred Share, we could purchase
385,604 Preferred Shares if the Offer is fully subscribed, which
would represent approximately 14.8% of the issued and
outstanding Preferred Shares as of December 1, 2011. At the
minimum Final Purchase Price of $12.50 per Preferred Share, we
could purchase 480,000 Preferred Shares if the Offer is fully
subscribed, which would represent approximately 18.4% of the
issued and outstanding Preferred Shares as of December 1,
2011. The Preferred Shares are listed and traded on the
Nasdaq-GS under the symbol “EMMSP.” On November 29,
2011, the last full trading day prior to the announcement of the
Offer, the last reported sale price of the Preferred Shares was
$14.15 per Preferred Share. Shareholders are strongly urged
to obtain current market quotations for the Preferred Shares
before deciding whether and at what purchase price or purchase
prices to tender their Preferred Shares. See Section 8
(“Price Range of Preferred Shares; No Payment of Unpaid
Dividends or Distributions on Preferred Shares Accepted in
the Offer”) and Section 12 (“Interests of
Directors and Executive Officers; Transactions and Arrangements
Concerning Shares of the Company”).
Our principal executive office is located at One Emmis Plaza,
40 Monument Circle, Suite 700, Indianapolis, Indiana 46204,
and our phone number is
(317) 266-0100.
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THE
OFFER
| 1. | Number of Preferred Shares; Proration. |
Upon the terms and subject to the conditions of the Offer, we
will purchase up to $6,000,000 in value of Preferred Shares, or
a lower amount depending on the number of Preferred Shares
properly tendered and not properly withdrawn in accordance with
Section 4 (“Withdrawal Rights”) before the
Expiration Date at a single purchase price selected by us
(taking into account the total number of Preferred Shares
tendered and the prices specified by tendering shareholders)
that is not greater than $15.56 nor less than $12.50 per
Preferred Share, to the seller in cash, less any applicable
withholding taxes and without interest (such purchase price, the
“Final Purchase Price”). If, based on the Final
Purchase Price, Preferred Shares having an aggregate value of
less than $6,000,000 are properly tendered and not properly
withdrawn, we will buy all Preferred Shares properly tendered
and not properly withdrawn.
The term “Expiration Date” means 5:00 p.m., New
York City Time, on Friday, December 30, 2011, unless and until
we, in our sole discretion, shall have extended the period of
time during which the Offer will remain open, in which event the
term “Expiration Date” shall refer to the latest time
and date at which the Offer, as so extended by us, shall expire.
See Section 15 (“Extension of the Offer; Termination;
Amendment”) for a description of our right to extend,
delay, terminate or amend the Offer.
In accordance with Instruction 5 of the Letter of
Transmittal, shareholders desiring to tender Preferred Shares
must either (1) specify that they are willing to sell their
Preferred Shares to us at the Final Purchase Price (which could
result in the tendering shareholder receiving a purchase price
per Preferred Share as low as $12.50), or (2) specify the
price or prices, not greater than $15.56 nor less than $12.50
per Preferred Share, at which they are willing to sell their
Preferred Shares to us under the Offer. Prices may be specified
in multiples of $0.25. Promptly following the Expiration Date,
we will determine the Final Purchase Price that we will pay for
Preferred Shares properly tendered and not properly withdrawn,
taking into account the number of Preferred Shares tendered and
the prices specified by tendering shareholders. We will select
the lowest single purchase price, not greater than $15.56 nor
less than $12.50 per Preferred Share, that will allow us to
purchase $6,000,000 in value of Preferred Shares, or a lower
amount depending on the number of Preferred Shares properly
tendered and not properly withdrawn. We will purchase all
Preferred Shares in the Offer at the Final Purchase Price.
If you specify that you are willing to sell your Preferred
Shares to us at the Final Purchase Price (which could result in
you receiving a purchase price per Preferred Share as low as
$12.50), your Preferred Shares will be deemed to be tendered at
the minimum price of $12.50 per Preferred Share for purposes of
determining the Final Purchase Price. You should understand that
this election may effectively lower the Final Purchase Price and
could result in your Preferred Shares being purchased at the
minimum price of $12.50 per Preferred Share, a price that is
below the last reported sale price of the Preferred Shares on
the Nasdaq-GS on November 29, 2011, the last full trading day
prior to announcement of the Offer, which was $14.15 per
Preferred Share.
We will announce the Final Purchase Price by press release as
promptly as practicable after such determination has been made.
We do not expect, however, to announce the final results of any
proration or the Final Purchase Price and begin paying for
tendered Preferred Shares until at least four business days
after the Expiration Date. We will only purchase Preferred
Shares properly tendered at prices at or below the Final
Purchase Price and not properly withdrawn. We may not purchase
all of the Preferred Shares tendered at or below the Final
Purchase Price if, based on the Final Purchase Price, Preferred
Shares representing more than $6,000,000 (or such greater number
of Preferred Shares as we may choose to purchase without
amending or extending the Offer) are properly tendered and not
properly withdrawn, because of the “odd lot” priority,
proration and conditional tender provisions of the Offer.
However, if the application of the “odd lot” priority
would result in our non-compliance with the listing standards of
the Nasdaq-GS, we will not apply such priority. We will return
all Preferred Shares tendered and not purchased pursuant to the
Offer, including Preferred Shares tendered at prices in excess
of the Final Purchase Price and Preferred Shares not purchased
because of proration or conditional tenders, to the tendering
shareholders at our expense, promptly following the Expiration
Date.
By following the Instructions to the Letter of Transmittal,
shareholders can specify different minimum prices for specified
portions of their Preferred Shares, but a separate Letter of
Transmittal must be submitted for Preferred Shares tendered at
each price. Shareholders can also specify the order in which the
specified portions will be purchased in the event that, as a
result of proration or otherwise, some but not all of the
tendered Preferred Shares are purchased pursuant
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to the Offer. In the event a shareholder does not designate such
order and fewer than all Preferred Shares are purchased due to
proration, the Depositary will select the order in which the
Preferred Shares are purchased.
We expressly reserve the right, in our sole discretion, to
change the per Preferred Share purchase price range and to
increase or decrease the value of Preferred Shares sought in the
Offer. We may increase the value of Preferred Shares sought in
the Offer to an amount greater than $6,000,000, subject to
applicable law. In accordance with the rules of the SEC, we may
increase the number of Preferred Shares accepted for payment in
the Offer by no more than 2% of the outstanding Preferred Shares
without amending or extending the Offer. However, if we purchase
an additional number of Preferred Shares in excess of 2% of the
outstanding Preferred Shares, we will amend and extend the Offer
in compliance with applicable law. See Section 15
(“Extension of the Offer; Termination; Amendment”).
In the event of an over-subscription of the Offer as described
below, Preferred Shares tendered at or below the Final Purchase
Price prior to the Expiration Date will be subject to proration,
except for odd lots. The proration period and withdrawal rights
also expire on the Expiration Date.
The Offer is not conditioned on any minimum number of Preferred
Shares being tendered. The Offer is, however, subject to certain
other conditions. See Section 7 (“Conditions of the
Offer”).
Priority of Purchases. On the terms and
subject to the conditions of the Offer, if, based on the Final
Purchase Price, Preferred Shares having an aggregate value in
excess of $6,000,000 (or such greater amount as we may elect to
pay, subject to applicable law), have been properly tendered at
prices at or below the Final Purchase Price and not properly
withdrawn before the Expiration Date, we will purchase properly
tendered Preferred Shares on the basis set forth below:
| • | first, we will purchase all Preferred Shares properly tendered and not properly withdrawn by any odd lot holder (holders of “odd lots” of less than 100 Preferred Shares) who (i) tenders all Preferred Shares owned beneficially or of record by such odd lot holder at a price at or below the Final Purchase Price (tenders of less than all of the Preferred Shares owned by such odd lot holder will not qualify for this preference); and (ii) completes the box entitled “Odd Lots” in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; provided, however that if the application of such odd lot priority would result in our non-compliance with the listing standards of the Nasdaq-GS, we will not apply such priority; | |
| • | second, after the purchase of all of the Preferred Shares properly tendered by odd lot holders, subject to the conditional tender provisions described in Section 6 (“Conditional Tender of Preferred Shares”), we will purchase all other Preferred Shares properly tendered at or below the Final Purchase Price on a pro rata basis with appropriate adjustment to avoid purchases of fractional Preferred Shares; and | |
| • | third, only if necessary to permit us to purchase $6,000,000 in value of Preferred Shares (or such greater amount as we may elect to pay, subject to applicable law), we will purchase Preferred Shares conditionally tendered (as described in Section 6 (“Conditional Tender of Preferred Shares”)) (for which the condition was not initially satisfied) at or below the Final Purchase Price, by random lot, to the extent feasible. To be eligible for purchase by random lot, shareholders whose Preferred Shares are conditionally tendered must have tendered all of their Preferred Shares. |
As a result of the foregoing priorities applicable to the
purchase of Preferred Shares tendered, it is possible that fewer
than all Preferred Shares tendered by a shareholder will be
purchased or that, if a tender is conditioned upon the purchase
of a specified number of Preferred Shares, none of those
Preferred Shares will be purchased even though those Preferred
Shares were tendered at prices at or below the Final Purchase
Price.
As we noted above, we may elect to purchase more than $6,000,000
in value of Preferred Shares in the Offer, subject to applicable
law. If we do so, the preceding provisions will apply to the
greater value.
Odd Lots. For purposes of the Offer, the term
“odd lots” means all Preferred Shares properly
tendered at prices at or below the Final Purchase Price held by
a shareholder who owns beneficially or of record an aggregate of
fewer than 100 Preferred Shares which we refer to as an
“odd lot holder,” and so certifies in the appropriate
place on the Letter of Transmittal and, if applicable, the
Notice of Guaranteed Delivery. To qualify for this preference,
an odd lot holder must tender Preferred Shares owned
beneficially or of record by the odd lot holder in accordance
with the procedures described in Section 3 (“Procedures for
Tendering Preferred Shares”). As set forth above, odd lots
will be accepted for payment before proration, if any, of the
purchase of other tendered Preferred Shares; provided, however
that if the application of such odd lot priority would
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result in our non-compliance with the listing standards of the
Nasdaq-GS, we will not apply such priority. This preference is
not available to beneficial or record holders of an aggregate of
100 or more Preferred Shares, even if these holders have
separate accounts or certificates representing fewer than 100
Preferred Shares. By accepting the Offer, an odd lot holder who
holds Preferred Shares in his or her name and tenders his or her
Preferred Shares directly to the Depositary would not only avoid
the payment of brokerage commissions, but also would avoid any
applicable odd lot discounts in a sale of such holder’s
Preferred Shares. Any odd lot holder wishing to tender such odd
lot holder’s Preferred Shares pursuant to the Offer should
complete the box entitled “Odd Lots” in the Letter of
Transmittal and, if applicable, the Notice of Guaranteed
Delivery.
Proration. If proration of tendered Preferred
Shares is required, we will determine the proration factor
promptly following the Expiration Date. Proration for each
shareholder tendering Preferred Shares, other than odd lot
holders, will be based on the ratio of the number of Preferred
Shares properly tendered and not properly withdrawn by such
shareholder to the total number of Preferred Shares properly
tendered and not properly withdrawn by all shareholders, other
than odd lot holders, at or below the Final Purchase Price,
subject to conditional tenders. Because of the difficulty in
determining the number of Preferred Shares properly tendered and
not withdrawn, and because of the odd lot procedure described
above, the conditional tender procedure described in
Section 6 (“Conditional Tender of Preferred
Shares”) and the guaranteed delivery procedure described in
Section 3 (“Procedures for Tendering Preferred
Shares”), we expect that we will not be able to announce
the final proration factor or commence payment for any Preferred
Shares purchased pursuant to the Offer until at least four
business days after the Expiration Date. The preliminary results
of any proration will be announced by press release as promptly
as practicable following the Expiration Date. After the
Expiration Date, shareholders may obtain preliminary proration
information from the Information Agent and also may be able to
obtain the information from their brokers.
As described in Section 14 (“Material United States
Federal Income Tax Consequences”), the number of Preferred
Shares that we will purchase from a shareholder pursuant to the
Offer may affect the United States federal income tax
consequences of the purchase to the shareholder and, therefore,
may be relevant to a shareholder’s decision whether to
tender Preferred Shares. The Letter of Transmittal affords each
shareholder who tenders Preferred Shares registered in such
shareholder’s name directly to the Depositary the
opportunity to designate the order of priority in which
Preferred Shares tendered are to be purchased in the event of
proration as well as the ability to condition such tender on a
minimum number of Preferred Shares being purchased.
This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of the Preferred Shares and
will be furnished to brokers, dealers, commercial banks, trust
companies and other nominees and similar persons whose names, or
the names of whose nominees, appear on our shareholder list or,
if applicable, who are listed as participants in a clearing
agency’s security position listing for subsequent
transmittal to beneficial owners of Preferred Shares.
| 2. | Purpose of the Offer; Certain Effects of the Offer. |
Purpose of the Offer. We believe that the
Offer is a prudent use of our financial resources given our
business profile, assets and current market price. The offer is
an element of our overall plan to enhance shareholder value and
rationalize our capital structure. It reflects our confidence
in our future outlook and long term value. If successfully
completed, the Offer will provide liquidity to the holders of
the Preferred Shares at prices that they may not be able to
obtain through market sales. Because we will be purchasing the
Preferred Shares at a discount to their liquidation preference
and without paying any accrued and unpaid dividends on the
Preferred Shares, the Offer will be accretive to the holders of
our common equity.
We believe that the modified “Dutch Auction” tender
offer set forth in this Offer to Purchase represents an
efficient mechanism to provide our shareholders with the
opportunity to tender all or a portion of their Preferred Shares
and, thereby, receive a return of some or all of their
investment if they so elect. The Offer provides shareholders
(particularly those who, because of the size of their
shareholdings, might not be able to sell their Preferred Shares
without potential disruption to the trading of the Preferred
Shares on the Nasdaq-GS) with an opportunity to obtain liquidity
with respect to all or a portion of their Preferred Shares
without potential disruption to the Preferred Share price.
We have a substantial amount of indebtedness (including our
Senior Secured Credit Facility and the Notes Facility), and the
instruments governing such indebtedness contain restrictive
financial covenants that impose significant operating and
financial restrictions on us. These restrictions include, but
are not limited to, prohibitions on, among other things, our
ability and the ability of our subsidiaries to incur additional
indebtedness, issue preferred stock, incur liens, pay dividends
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or distributions on the Preferred Shares and the Common Shares,
enter into asset purchase or sale transaction, merge or
consolidate with another company, dispose of all or
substantially all of our assets or make certain other payments
or investments. As a result, we have not paid dividends on the
Preferred Shares since October 15, 2008 and as of
December 1, 2011, dividends in arrears totaled $26,709,744,
or $10.22 per Preferred Share. These restrictions currently
limit our ability to grow our business through acquisitions and
could limit our ability to respond to market conditions or meet
extraordinary capital needs, which could adversely affect our
ability to finance our future operations or capital needs.
Assuming that $6,000,000 of Preferred Shares are purchased in
the Offer at a Final Purchase Price of $15.56 per share,
(i) excluding Preferred Shares in which we have acquired
rights to date (including those Preferred Shares whose vote we
are currently able to direct), preferred equity will comprise
approximately 14% of our total capitalization, down from
approximately 20% as of November 30, 2011, (ii) we
will eliminate the obligation to pay accrued and unpaid
dividends or distributions on any Preferred Shares that we
accept for purchase pursuant to the Offer, which we estimate
will result in the elimination of $3,942,470 of accrued and
unpaid dividends or distributions, and (iii) we will reduce
our dividend expense, which decreases net income available to
common shareholders, on a going-forward basis by $1,451,417 per
year, which will be partly offset by the interest we will have
to pay for amounts drawn under our Notes Facility of $1,377,000
per year in connection with the Offer, compounded on a quarterly
basis.
The Offer provides our shareholders with an efficient way to
sell their Preferred Shares without incurring brokers’ fees
or commissions associated with open market sales. Furthermore,
“odd lot holders”, as defined in Section 1
(“Number of Preferred Shares, Proration”), who hold
Preferred Shares registered in their names and tender their
Preferred Shares directly to the Depositary and whose Preferred
Shares are purchase in the Offer will avoid any applicable odd
lot discounts that might otherwise be payable on sales of their
Preferred Shares. See Section 1 (“Number of Preferred
Shares; Proration”).
In considering the Offer, we took into account the expected
financial impact of the Offer, including increased borrowing
under our Notes Facility in an amount up to $6,000,000 to fund
the Offer. We believe that the Offer is an efficient way to
improve shareholder return and provide additional liquidity to
the holders of Preferred Shares.
Certain Effects of the Offer. Shareholders who
decide not to tender will own a greater percentage interest in
the outstanding Preferred Shares following the consummation of
the Offer. These shareholders will also continue to bear the
risks associated with owning the Preferred Shares, including our
inability to pay dividends or distributions on our Preferred
Shares, the increased amount of our indebtedness under the Notes
Facility as a result of the completion of the Offer, and other
risks resulting from our purchase of Preferred Shares in the
Offer. In addition, the Preferred Shares, with respect to
distributions upon the liquidation,
winding-up
and dissolution of the Company, rank junior to any indebtedness
of the Company (including any indebtedness of the Company under
its Senior Secured Credit Facility and the Notes Facility) and
holders of Preferred Shares will generally not be entitled to
receive any payments in respect of their Preferred Shares prior
to the satisfaction of the claims of the Company’s lenders.
Shareholders may be able to sell non-tendered Preferred Shares
in the future on the Nasdaq-GS or otherwise, at a net price
significantly higher or lower than the Final Purchase Price in
the Offer. We can give no assurance, however, as to the price at
which a shareholder may be able to sell his or her Preferred
Shares in the future. The Offer is not conditioned on a minimum
number of Preferred Shares having been tendered, but is subject
to other conditions. Accordingly, the shareholder’s
decision to not tender his or her Preferred Shares will have no
effect on whether or not the Offer is completed. If any
conditions of the Offer are not satisfied, we will be under no
obligation to purchase the Preferred Shares.
Assuming that $6,000,000 of Preferred Shares are purchased in
the Offer at a Final Purchase Price of $15.56 per share, the
1,484,679 Preferred Shares whose vote we are currently able to
direct pursuant to agreements we entered into previously with
holders of those shares will constitute 66.673% of the issued
and outstanding Preferred Shares following the completion of the
Offer. We do not intend to cause these Preferred Shares to be
tendered in the Offer.
Following the completion of the Offer, we may continue to engage
in discussions and negotiations with holders of Preferred Shares
with respect to, among other things, acquiring their Preferred
Shares or entering into voting or other arrangements with such
holders. Although our Board of Directors has not made any
determinations with respect to making amendments to the terms of
the Preferred Shares, if we are able to obtain the ability to
direct the vote of at least
662/3%
of the issued and outstanding Preferred Shares following the
completion of the Offer, we may elect to, among other things,
amend various provisions applicable to the Preferred Shares,
including but not limited to: (i) reducing or eliminating
the liquidation preference of the Preferred Shares,
(ii) removing the ability of the holders of Preferred
Shares
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to require the Company to repurchase all or any portion of such
holders’ Preferred Shares upon a change of control or
certain going-private transactions, (iii) removing the
Company’s obligation to pay to holders of Preferred Shares
the amount of dividends in respect of their Preferred Shares
that are currently accrued and unpaid, (iv) changing the
designation of the Preferred Shares from “Cumulative”
to “Non-Cumulative” such that dividends or
distributions on the Preferred Shares shall cease to accrue,
(v) eliminating the rights of the holders of Preferred
Shares to nominate directors to the Company’s Board of
Directors as a result of arrearages in dividends, and
(vi) eliminating the restrictions on the Company’s
ability to pay dividends or make distributions on its Common
Shares prior to paying accrued and unpaid dividends or
distributions on Preferred Shares. If the above-described
amendments are made, the market value of the Preferred Shares
remaining outstanding may be materially and adversely affected,
and we may engage in various actions that are currently
prohibited or limited by the various provisions of the Preferred
Shares. See Section 2 (“Purpose of the Offer; Certain
Effects of the Offer”), Section 9 (“Source and
Amount of Funds”) and Section 12 (“Interests of
Directors and Executive Officers; Transactions and Arrangements
Concerning Shares of the Company”).
We do not intend that the Offer will cause the Preferred Shares
to be delisted from the Nasdaq-GS or that the Offer will be a
“going-private transaction” for purposes of
Rule 13e-3
under the Exchange Act. It is therefore a condition precedent
that we do not determine, in our reasonable judgment that the
Offer and the purchase of the Preferred Shares may
(1) cause the Offer to be a
“Rule 13e-3
transaction” for purposes of
Rule 13e-3
under the Exchange Act or (2) cause the Preferred Shares to
be delisted from the Nasdaq-GS. We intend to use commercially
reasonable efforts to maintain the listing once the Offer
closes, although the future listing status of the Preferred
Shares is subject to the determinations of the Nasdaq-GS and
therefore is beyond our control.
No dividend will be paid on the Preferred Shares in connection
with the Offer, whether or not the Offer is completed. Tendering
holders of the Preferred Shares that are purchased in the Offer
will no longer have any rights in respect of the accumulated and
unpaid dividends or distributions on those Preferred Shares
purchased by us. If you do not tender your Preferred Shares, you
will retain your rights in respect of accrued and unpaid
dividends or distributions. Agreements governing our existing
indebtedness (including our Senior Secured Credit Facility and
the Notes Facility) prohibit us from paying dividends on the
Preferred Shares and Common Shares, and we do not expect to pay
any dividends or distributions on the Preferred Shares in the
foreseeable future, whether or not the Offer is completed.
OUR BOARD OF DIRECTORS, WITH EIGHT DIRECTORS IN FAVOR AND ONE
DIRECTOR (WHO WAS THE REMAINING DIRECTOR APPOINTED BY THE
HOLDERS OF THE PREFERRED SHARES) DISSENTING, HAS AUTHORIZED US
TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR ANY MEMBER OF OUR
BOARD OF DIRECTORS OR BNY MELLON SHAREOWNER SERVICES, THE
INFORMATION AGENT AND THE DEPOSITARY FOR THE OFFER, MAKES ANY
RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR PREFERRED SHARES OR AS TO THE PURCHASE
PRICE OR PURCHASE PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR
PREFERRED SHARES. NEITHER WE NOR ANY MEMBER OF OUR BOARD OF
DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY HAS
AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION WITH RESPECT TO
THE OFFER. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO
TENDER YOUR PREFERRED SHARES AND, IF SO, HOW MANY PREFERRED
SHARES TO TENDER AND THE PURCHASE PRICE OR PURCHASE PRICES
AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSULT
YOUR OWN FINANCIAL AND TAX ADVISORS, AND READ CAREFULLY AND
EVALUATE THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE
RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING
THE OFFER. SEE SECTION 2 (“PURPOSE OF THE OFFER;
CERTAIN EFFECTS OF THE OFFER”).
From time to time in the future, to the extent permitted by
applicable law, we may acquire Preferred Shares that remain
outstanding, whether or not the Offer is consummated, through
tender offers, exchange offers, redemptions, open-market
purchases, privately negotiated transactions or otherwise, upon
such terms and at such prices as we or our affiliates may
determine, which may be more or less than the price to be paid
pursuant to the Offer and could be for cash or other
consideration. There can be no assurance as to which, if any, of
these alternatives or combinations thereof we or our affiliates
will choose to pursue in the future.
We intend to retire the Preferred Shares we acquire pursuant to
the Offer.
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Except as disclosed in this Offer to Purchase, we currently have
no plans, proposals or negotiations that relate to or would
result in:
| • | any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries; | |
| • | any purchase, sale or transfer of an amount of our assets or any of our subsidiaries’ assets which is material to us and our subsidiaries, taken as a whole; | |
| • | any material change in our present dividend rate or policy, our indebtedness or capitalization; | |
| • | any material change in our present Board of Directors or management or any plans or proposals to change the number or the terms of directors (although we may fill vacancies arising on our Board of Directors) or to change any material term of the employment contract of any executive officer; | |
| • | any material change in our corporate structure or business; | |
| • | any class of our equity securities becoming delisted from the Nasdaq-GS or ceasing to be authorized to be quoted on the Nasdaq-GS; | |
| • | any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Exchange Act; | |
| • | the termination or suspension of our obligation to file reports under Section 15(d) of the Exchange Act; | |
| • | the acquisition or disposition by any person of our securities, other than pursuant to our share repurchase program and the grant of restricted stock, restricted stock units, performance units or stock options to employees in the ordinary course of business; or | |
| • | any changes in our charter, bylaws or other governing instruments or other actions that could impede the acquisition of control of us. |
Nothing in the Offer will preclude us from pursuing, developing
or engaging in future plans, proposals or negotiations that
relate to or would result in one or more of the foregoing
events, subject to applicable law. Although we may not currently
have any plans, other than as disclosed or incorporated by
reference in this Offer to Purchase, that relate to or would
result in any of the events discussed above, we may undertake or
plan actions that relate to or could result in one or more of
these events. Shareholders tendering Preferred Shares in the
Offer may run the risk of foregoing the benefit of any
appreciation in the market price of the Preferred Shares
resulting from such potential future events.
| 3. | Procedures for Tendering Preferred Shares. |
Proper Tender of Preferred Shares. In general,
for Preferred Shares to be tendered pursuant to the Offer, the
certificates for such Preferred Shares (or confirmation of
receipt of such Preferred Shares pursuant to the procedure for
book-entry transfer set forth below), together with a properly
completed and duly executed Letter of Transmittal (or a manually
signed facsimile of the Letter of Transmittal), including any
required signature guarantees, or an “Agent’s
Message” (as defined below), and any other documents
required by the Letter of Transmittal, must be received before
5:00 p.m., New York City Time, on Friday, December 30,
2011 by the Depositary at its address set forth on the back
cover of this Offer to Purchase. In the alternative, the
tendering shareholder must, before the Expiration Date, comply
with the guaranteed delivery procedure described below.
Shareholders who hold Preferred Shares through nominees are
urged to consult their nominees to determine whether transaction
costs may apply if shareholders tender Preferred Shares through
the nominees and not directly to the Depositary.
How to Tender If You Hold Certificates Registered in Your Own
Name. If you hold certificates registered in your
own name, complete and sign a Letter of Transmittal according to
its Instructions, and deliver it, together with any required
signature guarantees, the certificates for your Preferred Shares
and any other documents required by the Letter of Transmittal,
to BNY Mellon Shareowner Services, the Depositary for the Offer.
How to Tender If You Are a Beneficial Owner But Not a
Book-Entry Participant. If your Preferred Shares
are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee (each of which we refer to as a
“nominee”) and you desire to tender Preferred Shares,
you should contact your nominee promptly and instruct it to
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tender your Preferred Shares on your behalf. Your nominee that
is a Book-Entry participant (as defined below) will then tender
your Preferred Shares in the manner described below.
How to Tender If You Are a Book-Entry
Participant. The Book-Entry Transfer Facility
facilitates the clearance and settlement of transactions through
electronic book-entry changes in accounts of Book-Entry
participants. Book-Entry participants include securities brokers
and dealers, banks, trust companies, clearing corporations and
other organizations (each, a “Book-Entry
participant”). To participate in the Offer, a Book-Entry
participant must:
| • | Comply with the automated tender offer program procedures of the Book-Entry Transfer Facility described below; or | |
| • | (1) Complete and sign and date the Letter of Transmittal, or a facsimile of the Letters of Transmittal; (2) have the signature on the Letters of Transmittal guaranteed if the Letters of Transmittal so requires; and (3) mail or deliver the Letters of Transmittal or facsimile to the Depositary prior to the Expiration Date. |
In order for the tender of Preferred Shares to be valid, either:
| • | The Depositary must receive, prior to the Expiration Date, a properly transmitted Agent’s Message (as described below); or | |
| • | The Depositary must receive, prior to the Expiration Date, a timely confirmation of book-entry transfer of tendered Preferred Shares into the Depositary’s account at Book-Entry Transfer Facility according to its procedure for book-entry transfer and the Letters of Transmittal and other documents required by the Letters of Transmittal. |
If Preferred Shares are tendered by delivery of a Letter of
Transmittal, to be validly tendered, the Depositary must receive
any physical delivery of the Letter of Transmittal and other
required documents at its address indicated on the back cover of
this Offer to Purchase and the front cover of the Letter of
Transmittal prior to the Expiration Date.
In accordance with Instruction 5 of the Letter of
Transmittal, shareholders desiring to tender Preferred Shares
under the Offer must complete the section captioned “Price
(In Dollars) Per Preferred Share At Which Preferred
Shares Are Being Tendered” by either (1) checking
the box in the section entitled “Preferred
Shares Tendered At Price Determined Under The Offer”
or (2) checking one of the boxes in the section entitled
“Preferred Shares Tendered At Price Determined By
Shareholder,” indicating the price at which Preferred
Shares are being tendered.
Shareholders who desire to tender Preferred Shares at more than
one price must complete a separate Letter of Transmittal for
each price at which Preferred Shares are tendered, provided that
the same Preferred Shares cannot be tendered (unless properly
withdrawn previously in accordance with Section 4
(“Withdrawal Rights”)) at more than one price. To
tender Preferred Shares properly, one and only one box must be
checked in the section captioned “Price (In Dollars) Per
Preferred Share At Which Preferred Shares Are Being
Tendered” in the Letter of Transmittal.
If tendering shareholders wish to maximize the chance that we
will purchase their Preferred Shares, they should check the box
in the section entitled “Preferred Shares Tendered At
Price Determined Under The Offer” in the Letter of
Transmittal under the section captioned “Price (In Dollars)
Per Preferred Share At Which Preferred Shares Are Being
Tendered.” Note that this election may have the effect of
lowering the Final Purchase Price and could result in the
tendered Preferred Shares being purchased at the minimum price
of $12.50 per Preferred Share, a price that is below the last
reported sale price of the Preferred Shares on the Nasdaq-GS on
November 29, 2011, the last full trading day prior to
announcement of the Offer, which was $14.15 per Preferred Share,
and could be below the last reported sale price of the Preferred
Shares on the Nasdaq-GS on the Expiration Date. If tendering
shareholders wish to indicate a specific price (in multiples of
$0.25) at which their Preferred Shares are being tendered, they
must check the appropriate box in the section entitled
“Preferred Shares Tendered At Price Determined By
Shareholder” in the section captioned “Price (In
Dollars) Per Preferred Share At Which Preferred Shares Are
Being Tendered” in the Letter of Transmittal. Tendering
shareholders should be aware that this election could mean that
none of their Preferred Shares will be purchased if they check a
box other than the box representing the price at or below the
Final Purchase Price. In addition, odd lot holders who tender
all of their Preferred Shares must complete the section entitled
“Odd Lots” in the Letter of Transmittal to qualify for
the preferential treatment available to odd lot holders as set
forth in Section 1 (“Number of Preferred Shares;
Proration”).
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Shareholders may tender Preferred Shares subject to the
condition that all, or a specified minimum number of Preferred
Shares, be purchased. Any shareholder desiring to make such a
conditional tender should so indicate in the box entitled
“Conditional Tender” in the Letter of Transmittal. It
is the tendering shareholder’s responsibility to determine
the minimum number of Preferred Shares to be purchased.
Shareholders should consult their own financial and tax advisors
with respect to the effect of proration of the Offer and the
advisability of making a conditional tender. See Section 6
(“Conditional Tender of Preferred Shares”) and
Section 14 (“Material United States Federal Income Tax
Consequences”).
Subject to and effective upon the acceptance for purchase of,
and payment for, Preferred Shares tendered thereby, by executing
and delivering the Letter of Transmittal, or being deemed to
have done so as part of your electronic submission of your
tender through the Book-Entry Transfer Facility, you agree to be
bound by the terms of the Letters of Transmittal, by which,
among other things, you (1) irrevocably tender, sell,
assign and transfer to or upon our order all right, title and
interest in and to all the Preferred Shares tendered thereby and
(2) irrevocably appoint the Depositary as your true and
lawful agent and attorney-in-fact (with full knowledge that the
Depositary also acts as our agent with respect to the tendered
Preferred Shares), with full power coupled with an interest, to:
| • | Transfer ownership of the Preferred Shares on the account books maintained by the Book-Entry Transfer Facility, together with all accompanying evidence of transfer and authenticity, to or upon our order; | |
| • | Present the Preferred Shares for transfer on the relevant security register; and | |
| • | Receive all benefits or otherwise exercise all rights of beneficial ownership of the Preferred Shares, all in accordance with the terms of the Offer. |
Signature Guarantees and Method of
Delivery. No signature guarantee is required if:
| • | the Letter of Transmittal is signed by the registered holder of the Preferred Shares (which term, for purposes of this Section 3 (“Procedures for Tendering Preferred Shares”), will include any Book-Entry participant whose name appears on a security position listing as the owner of the Preferred Shares) tendered and such holder has not completed either the section entitled “Special Payment Instructions” or the section entitled “Special Delivery Instructions” in the Letter of Transmittal; or | |
| • | Preferred Shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program or an “eligible guarantor institution,” as the term is defined in Exchange Act Rule 17Ad-15, each of the foregoing constituting an “Eligible Institution.” See Instruction 1 of the Letter of Transmittal. |
If a certificate for Preferred Shares is registered in the name
of a person other than the person executing the Letter of
Transmittal, or if payment is to be made, or new certificates
for Preferred Shares not purchased or tendered are to be issued
to a person other than the registered holder, then the
certificate must be endorsed or accompanied by an appropriate
stock power, signed in either case exactly as the name of the
registered holder appears on the certificate, with the signature
guaranteed by an Eligible Institution.
Payment for Preferred Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by
the Depositary of:
| • | one of (a) certificates for the Preferred Shares or (b) a timely confirmation of the book-entry transfer of the Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility as described below; | |
| • | one of (a) a properly completed and duly executed Letter of Transmittal or a manually signed facsimile of the Letter of Transmittal, including any required signature guarantees or (b) an Agent’s Message (as defined below) in the case of a book-entry transfer; and | |
| • | any other documents required by the Letter of Transmittal. |
The method of delivery of all documents, including
certificates for Preferred Shares, the Letter of Transmittal and
any other required documents, is at the sole election and risk
of the tendering shareholder. If delivery is by mail, then
registered mail with return receipt requested, properly insured,
is recommended. Preferred Shares will be deemed delivered only
when actually received by the Depositary (including, in the case
of a book-entry transfer, by book-entry confirmation). In all
cases, sufficient time should be allowed to ensure timely
delivery. In all cases
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where you desire to tender Preferred Shares, you should allow
sufficient time to assure delivery to the Depositary before the
Expiration Date. You should not send any Letter of Transmittal
to us.
All deliveries in connection with the Offer, including a
Letter of Transmittal and certificates for Preferred Shares,
must be made to the Depositary and not to us, the Information
Agent or the Book-Entry Transfer Facility. ANY DOCUMENTS
DELIVERED TO US, THE INFORMATION AGENT OR THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT BE FORWARDED TO THE DEPOSITARY AND
WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
Book-Entry Delivery. The Depositary will
establish an account with respect to the Preferred Shares for
purposes of the Offer at the Book-Entry Transfer Facility within
two (2) business days after the date of this Offer to
Purchase, and any financial institution that is a participant in
the Book-Entry Transfer Facility’s automated tender offer
program may make book-entry delivery of the Preferred Shares by
means of a book-entry transfer by causing the Book-Entry
Transfer Facility to transfer Preferred Shares into the
Depositary’s account in accordance with the Book-Entry
Transfer Facility’s procedures for transfer. Although
delivery of Preferred Shares may be effected through a
book-entry transfer into the Depositary’s account at the
Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal or a manually signed facsimile of
the Letter of Transmittal, including any required signature
guarantees, or an Agent’s Message, and any other required
documents must, in any case, be transmitted to and received by
the Depositary at its address set forth on the back cover of
this Offer to Purchase before the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery
procedure described below. Delivery of the Letter of Transmittal
and any other required documents to the Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
The term “Agent’s Message” means a message
transmitted by the Book-Entry Transfer Facility to, and received
by, the Depositary, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the
Preferred Shares that such participant has received and agrees
to be bound by the terms of the Letter of Transmittal and that
we may enforce such agreement against the participant.
Guaranteed Delivery. If you wish to tender
Preferred Shares in the Offer and your certificates for
Preferred Shares are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the
Depositary prior to the Expiration Date, your tender may be
effected if all the following conditions are met:
| • | your tender is made by or through an Eligible Institution; | |
| • | a properly completed and duly executed Notice of Guaranteed Delivery in the form we have provided is received by the Depositary, as provided below, prior to the Expiration Date; and | |
| • | the Depositary receives at the address listed on the back cover of this Offer to Purchase and within the period of three (3) Nasdaq-GS trading days after the date of execution of that Notice of Guaranteed Delivery, either: (i) the certificates representing the Preferred Shares being tendered, in the proper form for transfer, together with all other required documents and a Letter of Transmittal, which has been properly completed and duly executed and includes all signature guarantees required; or (ii) confirmation of book-entry transfer of the Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility, together with all other required documents and either a Letter of Transmittal, which has been properly completed and duly executed and includes all signature guarantees required, or an Agent’s Message. |
A Notice of Guaranteed Delivery must be delivered to the
Depositary by hand, overnight courier, facsimile transmission or
mail before the Expiration Date and must include a guarantee by
an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Return of Unpurchased Preferred Shares. If any
tendered Preferred Shares are not purchased under the Offer or
are properly withdrawn before the Expiration Date, or if less
than all Preferred Shares evidenced by a shareholder’s
certificate(s) are tendered, we will return certificates for
unpurchased Preferred Shares promptly after the expiration or
termination of the Offer or, in the case of Preferred Shares
tendered by book-entry transfer at the Book-Entry Transfer
Facility, the Preferred Shares will be credited to the
appropriate account maintained by the tendering shareholder at
the Book-Entry Transfer Facility, in each case without expense
to the shareholder.
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Determination of Validity; Rejection of Preferred Shares;
Waiver of Defects; No Obligation to Give Notice of
Defects. All questions as to the number of
Preferred Shares to be accepted, the Final Purchase Price to be
paid for Preferred Shares to be accepted and the validity, form,
eligibility (including time of receipt) and acceptance for
payment of any tender of Preferred Shares will be determined by
us, in our sole discretion, and our determination will be final
and binding on all parties. We reserve the absolute right to
reject any or all tenders of any Preferred Shares that we
determine are not in proper form or the acceptance for payment
of or payment for which may, in the opinion of our counsel, be
unlawful. We also reserve the absolute right to waive any of the
conditions of the Offer on or prior to the Expiration Date, or
any defect or irregularity in any tender with respect to any
particular Preferred Shares or any particular shareholder
(whether or not we waive similar defects or irregularities in
the case of other shareholders), and our interpretation of the
terms of the Offer will be final and binding on all parties. In
the event a condition is waived with respect to any particular
shareholder, the same condition will be waived with respect to
all shareholders. No tender of Preferred Shares will be deemed
to have been properly made until all defects or irregularities
have been cured by the tendering shareholder or waived by us. We
will not be liable for failure to waive any conditions of the
Offer, or for any defect or irregularity in any tender of
Preferred Shares. Neither we nor the Depositary, the Information
Agent or any other person will be obligated to give notice of
any defects or irregularities in tenders, nor will any of the
foregoing incur any liability for failure to give any such
notification.
Tendering Shareholder’s Representation and Warranty; Our
Acceptance Constitutes an Agreement. It is a
violation of Exchange Act
Rule 14e-4
for a person, directly or indirectly, to tender Preferred Shares
for that person’s own account unless, at the time of tender
and at the end of the proration period or period during which
Preferred Shares are accepted by lot (including any extensions
of such period), the person so tendering (1) has a
“net long position” equal to or greater than the
amount of Preferred Shares tendered in (a) Preferred Shares
or (b) other securities convertible into or exchangeable or
exercisable for Preferred Shares and, upon acceptance of the
tender, will acquire the Preferred Shares by conversion,
exchange or exercise and (2) will deliver or cause to be
delivered the Preferred Shares in accordance with the terms of
the Offer.
Rule 14e-4
also provides a similar restriction applicable to a tender on
behalf of another person.
A tender of Preferred Shares in accordance with any of the
procedures described above will constitute the tendering
shareholder’s acceptance of the terms and conditions of the
Offer, as well as the tendering shareholder’s
representation and warranty to us that (1) the shareholder
has a “net long position,” within the meaning of
Rule 14e-4
promulgated under the Exchange Act, in the Preferred Shares or
equivalent securities at least equal to the Preferred Shares
being tendered, and (2) the tender of Preferred Shares
complies with
Rule 14e-4.
Our acceptance for payment of Preferred Shares tendered pursuant
to the Offer will constitute a binding agreement between the
tendering shareholder and us on the terms and subject to the
conditions of the Offer.
A tender of Preferred Shares made pursuant to any method of
delivery set forth herein will also constitute a representation
and warranty to us that the tendering shareholder has full power
and authority to tender, sell, assign and transfer the Preferred
Shares tendered, and that, when the same are accepted for
purchase by us, we will acquire good, marketable and
unencumbered title thereto, free and clear of all security
interests, liens, restrictions, claims, encumbrances and other
obligations relating to the sale or transfer of the Preferred
Shares, and the same will not be subject to any adverse claim or
right. Any such tendering shareholder will, on request by the
Depositary or us, execute and deliver any additional documents
deemed by the Depositary or us to be necessary or desirable to
complete the sale, assignment and transfer of the Preferred
Shares tendered, all in accordance with the terms of the Offer.
All authority conferred or agreed to be conferred by delivery of
the Letter of Transmittal shall be binding on the successors,
assigns, heirs, personal representatives, executors,
administrators and other legal representatives of the tendering
shareholder and shall not be affected by, and shall survive, the
death or incapacity of such tendering shareholder.
Lost or Destroyed Certificates. Shareholders
whose certificates for part or all of their Preferred Shares
have been lost, destroyed or stolen may contact BNY Mellon
Shareowner Services, the Depositary for the Preferred Shares, at
the address and phone number set forth on the back cover of this
Offer to Purchase for instructions to obtain a replacement
certificate. That certificate will then be required to be
submitted together with the Letter of Transmittal in order to
receive payment for Preferred Shares that are tendered and
accepted for payment. A bond may be required to be posted by the
shareholder to secure against the risk that the certificates may
be subsequently recirculated. The Letter of Transmittal and
related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
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Shareholders are requested to contact the Depositary immediately
in order to permit timely processing of this documentation.
Certificates for Preferred Shares, together with a properly
completed Letter of Transmittal and any other documents required
by the Letter of Transmittal, must be delivered to the
Depositary and not to us, the Book-Entry Transfer Facility or
the Information Agent. Any certificates delivered to us, the
Book-Entry Transfer Facility or the Information Agent will not
be forwarded to the Depositary and will not be deemed to be
properly tendered.
Information Reporting and Backup
Withholding. Payments made to shareholders in the
Offer may be reported to the Internal Revenue Service (the
“IRS”). In addition, under the United States federal
income tax laws, backup withholding at the statutory rate
(currently 28%) may apply to the amount paid to certain
shareholders (who are not “exempt” recipients)
pursuant to the Offer. To prevent backup withholding, each
non-corporate shareholder who is a U.S. Holder (as defined
in Section 14 (“Material United States Federal Income
Tax Consequences”)) and who does not otherwise establish an
exemption from backup withholding must notify the Depositary of
the shareholder’s taxpayer identification number (employer
identification number or social security number) and provide
certain other information by completing, under penalties of
perjury, the IRS
Form W-9
included in the Letter of Transmittal. Failure to timely provide
the correct taxpayer identification number on the IRS
Form W-9
may subject the shareholder to a $50 penalty imposed by the IRS.
Certain “exempt” recipients (including, among others,
all corporations and certain
non-U.S. Holders
(as defined in Section 14 (“Material United States
Federal Income Tax Consequences”)) are not subject to these
backup withholding requirements. For a
non-U.S. Holder
to qualify for such exemption, such
non-U.S. Holder
must submit a statement (generally, an IRS
Form W-8BEN
or other applicable
Form W-8),
signed under penalties of perjury, attesting to such
non-U.S. Holder’s
exempt status. A copy of the appropriate IRS
Form W-8
may be obtained from the Depositary or from the IRS website
(www.irs.gov). A domestic entity that is treated as a
disregarded entity for United States federal income tax purposes
and that has a foreign owner must use the appropriate IRS
Form W-8,
and not the IRS
Form W-9.
See Instruction 10 to the Letter of Transmittal.
Backup withholding is not an additional tax. Taxpayers may use
amounts withheld as a credit against their United States federal
income tax liability or may claim a refund of such amounts if
they timely provide certain required information to the IRS.
Shareholders should consult their own tax advisors regarding
the application of backup withholding to their particular
circumstances and the availability of, and procedure for
obtaining, an exemption from backup withholding.
United States Federal Withholding Tax on Payments to
Non-U.S. Holders. Because
it is unclear whether the cash received by a
non-U.S. Holder
(as defined in Section 14 (“Material United States
Federal Income Tax Consequences”)) in connection with the
Offer will be treated (i) as proceeds of a sale or exchange
of the Preferred Shares purchased by us or (ii) as a
distribution from us in respect of our stock, the Company
intends to treat such payment as a dividend distribution for
withholding tax purposes. Accordingly, payments to
non-U.S. Holders
will be subject to withholding tax at a rate of 30% of the gross
proceeds paid, unless the
non-U.S. Holder
establishes an entitlement to a reduced or zero rate of
withholding tax by timely completing, under penalties of
perjury, the applicable IRS
Form W-8.
In order to obtain a reduced or zero rate of withholding tax
pursuant to an applicable income tax treaty, a
non-U.S. Holder
must deliver to the Depositary, before the payment is made, a
properly completed and executed IRS
Form W-8BEN
(or other applicable IRS
Form W-8)
claiming such an exemption or reduction. In order to claim an
exemption from withholding tax on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United
States, a
non-U.S. Holder
must deliver to the Depositary before the payment is made a
properly completed and executed IRS
Form W-8ECI.
A
non-U.S. Holder
may be eligible to obtain a refund of all or a portion of any
tax withheld if such shareholder meets the “complete
termination” or “not essentially equivalent to a
dividend” tests described in Section 14
(“Material United States Federal Income Tax
Consequences”) or if the shareholder is entitled to a
reduced or zero rate of withholding tax pursuant to any
applicable income tax treaty and a higher rate was withheld.
Non-U.S.
Holders are urged to consult their tax advisors regarding the
application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or
exemption, and the refund procedure.
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| 4. | Withdrawal Rights. |
Except as otherwise provided in this Section 4, tenders of
Preferred Shares pursuant to the Offer are irrevocable.
Preferred Shares tendered pursuant to the Offer may be withdrawn
at any time before the Expiration Date. If after 5:00 p.m.,
New York City Time, on Monday, January 30, 2012 (40
business days after the commencement of the Offer) we have not
accepted for payment the Preferred Shares you have tendered to
us, you may also withdraw your Preferred Shares at any time
thereafter.
For a withdrawal to be effective, a notice of withdrawal must be
in written form and must be received in a timely manner by the
Depositary at the address set forth on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the
name of the tendering shareholder; the number of Preferred
Shares to be withdrawn; and the name of the registered holder of
the Preferred Shares. If certificates for Preferred Shares to be
withdrawn have been delivered or otherwise identified to the
Depositary, then, before the release of the certificates, the
tendering shareholder must also submit the serial numbers shown
on the particular certificates for Preferred Shares to be
withdrawn and the signature(s) on the notice of withdrawal must
be guaranteed by an Eligible Institution (except in the case of
Preferred Shares tendered for the account of an Eligible
Institution). If Preferred Shares have been tendered pursuant to
the procedure for book-entry transfer described in
Section 3 (“Procedures for Tendering Preferred
Shares”), the notice of withdrawal also must specify the
name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Preferred Shares and
must otherwise comply with the Book-Entry Transfer
Facility’s procedures. If a shareholder has used more than
one Letter of Transmittal or has otherwise tendered Preferred
Shares in more than one group of Preferred Shares, the
shareholder may withdraw Preferred Shares using either separate
notices of withdrawal or a combined notice of withdrawal, so
long as the information specified above is included.
We will determine all questions as to the form and validity,
including the time of receipt, of any notice of withdrawal, in
our sole discretion, which determination will be final and
binding on all parties. Neither we nor the Depositary, the
Information Agent or any other person will be obligated to give
notice of any defects or irregularities in any notice of
withdrawal, nor will any of the foregoing incur liability for
failure to give any such notification. Withdrawals may not be
rescinded, and any Preferred Shares properly withdrawn will be
deemed not properly tendered for purposes of the Offer. However,
withdrawn Preferred Shares may be re-tendered before the
Expiration Date by again following one of the procedures
described in Section 3 (“Procedures for Tendering
Preferred Shares”).
If we extend the Offer, are delayed in our purchase of Preferred
Shares or are unable to purchase Preferred Shares pursuant to
the Offer for any reason, then, without prejudice to our rights
under the Offer, the Depositary may, subject to applicable law,
retain tendered Preferred Shares on our behalf, and the
Preferred Shares may not be withdrawn except to the extent
tendering shareholders are entitled to withdrawal rights as
described in this Section 4. Our reservation of the right
to delay payment for Preferred Shares that we have accepted for
payment is limited by Exchange Act
Rule 13e-4(f)(5),
which requires that we must pay the consideration offered or
return the Preferred Shares tendered promptly after termination
or withdrawal of the Offer.
| 5. | Purchase of Preferred Shares and Payment of Purchase Price. |
On the terms and subject to the conditions of the Offer,
promptly following the Expiration Date, we will:
| • | determine the Final Purchase Price, taking into account the number of Preferred Shares so tendered and the prices specified by tendering shareholders; and | |
| • | accept for payment and pay for (and thereby purchase) Preferred Shares properly tendered at prices at or below the Final Purchase Price and not properly withdrawn. We intend to purchase Preferred Shares having an aggregate value of $6,000,000 and may increase the number of Preferred Shares accepted for payment in the Offer by no more than 2% of the outstanding Preferred Shares without amending or extending the Offer. |
For purposes of the Offer, we will be deemed to have accepted
for payment (and therefore purchased), subject to the odd lot
priority, proration and conditional tender provisions of the
Offer, Preferred Shares that are properly tendered at or below
the Final Purchase Price and not properly withdrawn only when,
as and if we give oral or written notice to the Depositary of
our acceptance of the Preferred Shares for payment pursuant to
the Offer.
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On the terms and subject to the conditions of the Offer,
promptly after the Expiration Date, we will accept for purchase
and pay a single per Preferred Share purchase price for all of
the Preferred Shares accepted for payment in accordance with the
Offer. In all cases, payment for Preferred Shares tendered and
accepted for payment in accordance with the Offer will be made
promptly, subject to possible delay due to proration, but only
after timely receipt by the Depositary of:
| • | certificates for Preferred Shares or a timely confirmation of a book-entry transfer of Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility; | |
| • | a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile of the Letter of Transmittal) or an Agent’s Message in the case of book-entry transfer; and | |
| • | any other documents required by the Letter of Transmittal. |
We will pay for Preferred Shares purchased pursuant to the Offer
by depositing the aggregate purchase price for the Preferred
Shares with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from
us and transmitting payment to the tendering shareholders. In
the event of proration, the Depositary will determine the
proration factor and pay for those tendered Preferred Shares
accepted for payment promptly after the Expiration Date.
Certificates for all Preferred Shares tendered and not
purchased, including all Preferred Shares tendered at prices in
excess of the Final Purchase Price and Preferred Shares not
purchased due to proration or conditional tenders, will be
returned, or, in the case of Preferred Shares tendered by
book-entry transfer, will be credited to the account maintained
with the Book-Entry Transfer Facility by the participant who
delivered the Preferred Shares, to the tendering shareholder
promptly after the expiration or termination of the Offer at our
expense.
Under no circumstances will interest be paid on the Final
Purchase Price for the Preferred Shares, regardless of any delay
in making payment. In addition, if certain events occur, we may
not be obligated to purchase Preferred Shares pursuant to the
Offer. See Section 7 (“Conditions of the
Offer”).
We will pay all stock transfer taxes, if any, payable on the
transfer to us of Preferred Shares purchased pursuant to the
Offer. If, however, payment of the Final Purchase Price is to be
made to, or (in the circumstances permitted by the Offer) if
unpurchased Preferred Shares are to be registered in the name
of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, the amount of all
stock transfer taxes, if any (whether imposed on the registered
holder or the other person), payable on account of the transfer
to that person will be deducted from the Final Purchase Price
unless evidence satisfactory to us of the payment of the stock
transfer taxes, or exemption from payment of the stock transfer
taxes, is submitted. See Instruction 7 of the Letter of
Transmittal.
| 6. | Conditional Tender of Preferred Shares. |
Subject to the exception for odd lot holders, in the event of an
over-subscription of the Offer, Preferred Shares tendered at or
below the Final Purchase Price prior to the Expiration Date will
be subject to proration. See Section 1 (“Number of
Preferred Shares; Proration”). As discussed in
Section 14 (“Material United States Federal Income Tax
Consequences”), the number of Preferred Shares to be
purchased from a particular shareholder may affect the tax
treatment of the purchase to the shareholder and the
shareholder’s decision whether to tender. Accordingly, a
shareholder may tender Preferred Shares subject to the condition
that a specified minimum number of the shareholder’s
Preferred Shares tendered pursuant to a Letter of Transmittal
must be purchased if any Preferred Shares tendered are
purchased. Any shareholder desiring to make a conditional tender
must so indicate in the box entitled “Conditional
Tender” in the Letter of Transmittal, and, if applicable,
in the Notice of Guaranteed Delivery. We urge each
shareholder to consult with his or her own financial or tax
advisor with respect to the advisability of making a conditional
tender.
Any tendering shareholder wishing to make a conditional tender
must calculate and appropriately indicate the minimum number of
Preferred Shares that must be purchased from that shareholder if
any are to be purchased. After the Offer expires, if, based on
the Final Purchase Price determined in the Offer, Preferred
Shares representing more than $6,000,000 (or such greater number
of Preferred Shares as we may choose to purchase without
amending or extending the Offer) are properly tendered and not
properly withdrawn, so that we must prorate our acceptance of
and payment for tendered Preferred Shares, we will calculate a
preliminary proration percentage based upon all Preferred Shares
properly tendered, conditionally or unconditionally. If the
effect of this preliminary proration would be to reduce the
number of Preferred Shares to be purchased from any shareholder
below the minimum number specified, the conditional tender will
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automatically be regarded as withdrawn (except as provided in
the next paragraph). All Preferred Shares tendered by a
shareholder subject to a conditional tender pursuant to the
Letter of Transmittal and regarded as withdrawn as a result of
proration will be returned promptly after the Expiration Date.
After giving effect to these withdrawals, we will accept the
remaining Preferred Shares properly tendered, conditionally or
unconditionally, on a pro rata basis, if necessary. If
conditional tenders would otherwise be regarded as withdrawn and
would cause the total number of Preferred Shares to be purchased
to fall below an aggregate value of $6,000,000 (or such greater
amount as we may elect to pay, subject to applicable law) then,
to the extent feasible, we will select enough of the conditional
tenders that would otherwise have been deemed withdrawn to
permit us to purchase $6,000,000 in value of Preferred Shares
(or such greater amount as we may elect to pay, subject to
applicable law). In selecting among the conditional tenders, we
will select by random lot, treating all tenders by a particular
taxpayer as a single lot, and will limit our purchase in each
case to the designated minimum number of Preferred Shares to be
purchased.
| 7. | Conditions of the Offer. |
The Offer is not conditioned on any minimum number of Preferred
Shares being tendered. Notwithstanding any other provision of
the Offer, we will not be required to accept for payment,
purchase or pay for any Preferred Shares tendered, and may
terminate, extend or amend the Offer or may (subject to
Rule 13e-4(f)
and
Rule 14e-1(c)
under the Exchange Act), postpone the acceptance for payment of
or the payment for Preferred Shares tendered, subject to
Exchange Act
Rule 13e-4(f)(5),
which requires that we must pay the consideration offered or
return the Preferred Shares tendered promptly after termination
or withdrawal of the Offer, if at any time on or after the
commencement of the Offer and on or prior to the Expiration Date
(or such other time as specified below) any of the following
events have occurred (or are determined by us to have occurred)
that, in our reasonable judgment and regardless of the
circumstances giving rise to the event or events (including any
action or inaction by us), makes it inadvisable to proceed with
the Offer or with acceptance for payment or payment for the
Preferred Shares in the Offer:
| • | any of the conditions precedent under the Notes Facility for the borrowing of aggregate proceeds under the Notes Facility that are sufficient to fund the purchase of the Preferred Shares in the Offer and to pay all related fees and expenses shall not have been satisfied; | |
| • | the closing sale price of the Preferred Shares on the Nasdaq-GS exceeded $15.56 for any five or more trading days on or after November 30, 2011 and on or prior to the Expiration Date; | |
| • | there has been any action threatened, pending or taken, including any settlement, or any approval withheld, or any statute, rule, regulation, judgment, order, administrative action, investigation, arbitration, litigation, suit or other civil or criminal proceeding, or any other decision, judgment, writ, decree, award or other determination of any government authority, audit, review, ruling, other action or injunction threatened, invoked, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or us or any of our subsidiaries, including any settlement, by any court, government or governmental, regulatory or administrative authority, agency or tribunal, domestic, foreign or supranational, that, in our reasonable judgment, seeks to or could directly or indirectly: |
| • | make illegal, or delay or otherwise directly or indirectly restrain, prohibit or otherwise affect the consummation of the Offer, the acquisition of some or all of the Preferred Shares pursuant to the Offer or otherwise relates in any manner to the Offer; | |
| • | make the acceptance for payment of, or payment for, some or all of the Preferred Shares illegal or otherwise restrict or prohibit consummation of the Offer; | |
| • | delay or restrict our ability, or render us unable, to accept for payment or pay for some or all of the Preferred Shares to be purchased pursuant to the Offer; or | |
| • | materially and adversely affect our or our subsidiaries’ or our affiliates’ business, condition (financial or otherwise), income, operations or prospects, taken as a whole, or otherwise materially impair our ability to purchase some or all of the Preferred Shares pursuant to the Offer; |
| • | any change (or any condition, event or development involving a prospective change) shall have occurred in the business, properties, assets, liabilities, capitalization, shareholders’ equity, income, condition (financial or otherwise), operations, licenses, franchises, permits, permit applications, results of operations or prospects of the |
16
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| Company or any of its subsidiaries, which, in our reasonable judgment, is or may be materially adverse, or we will have become aware of any fact which, in our reasonable judgment, has or may have material adverse significance with respect to the Company or any of its subsidiaries; |
| • | any default or event of default has occurred, is continuing to occur, or would occur as a result of the consummation of the Offer, under either the Notes Facility, or the Senior Secured Credit Facility; | |
| • | there has occurred any of the following: |
| • | any general suspension of trading in, or limitation on prices for, securities on any United States national securities exchange or in the over-the-counter market; | |
| • | the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory; | |
| • | a material adverse change in United States or any other currency exchange rates or a suspension of or limitation on the markets therefor; | |
| • | a material impairment in the trading market for debt securities in the United States; | |
| • | a decrease of more than 10% in the market price of the Preferred Shares or in the general level of market prices for equity securities in the United States of the New York Stock Exchange Index, the Dow Jones Industrial Average, the NASDAQ Global Market Composite Index or Standard & Poor’s Composite Index of 500 Industrial Companies, in each case measured from the close of trading on November 29, 2011, the last trading day prior to announcement of the Offer; | |
| • | the commencement or declaration of a war, armed hostilities or other similar national or international calamity, including, but not limited to, an act of terrorism, directly or indirectly involving the United States, on or after December 1, 2011; | |
| • | any material escalation of any war or armed hostilities which had commenced prior to December 1, 2011; | |
| • | any limitation, whether or not mandatory, by any governmental, regulatory or administrative agency or authority on, or any event that, in our reasonable judgment, could materially adversely affect, the extension of credit by banks or other lending institutions in the United States; | |
| • | any change in the general political, market, economic or financial conditions, domestically or internationally, that is reasonably likely to materially and adversely affect our business or the trading in the Preferred Shares; or | |
| • | in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; |
| • | any approval, permit, authorization, favorable review, consent or other action of any domestic or foreign governmental, administrative or regulatory agency, authority, tribunal or third party required to be obtained in connection with the Offer shall not have been obtained on terms satisfactory to us in our reasonable discretion, and regardless of the circumstances (including any action or inaction by us or any of our affiliates) giving rise to any such condition; or | |
| • | we determine, in our reasonable judgment, that the consummation of the Offer and the purchase of the Preferred Shares may (1) cause the Offer to be a “Rule 13e-3 transaction” for purposes of Rule 13e-3 under the Exchange Act or (2) cause the Preferred Shares to be delisted from the Nasdaq-GS. |
The conditions referred to above are for our sole benefit and
may be asserted by us regardless of the circumstances, including
any action or inaction by us, giving rise to any such condition,
and may be waived by us (other than those conditions dependent
upon the receipt of necessary government approvals), in whole or
in part, at any time and from time to time in our reasonable
discretion.
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Table of Contents
If any of the foregoing conditions of the Offer shall not have
been satisfied or waived by us, other than, in the case of any
waiver, those conditions dependent upon the receipt of necessary
government approvals, we reserve the right, but will not be
obligated, subject to applicable law, to:
| • | return the Preferred Shares tendered pursuant to the Offer to the tendering holders of Preferred Shares; | |
| • | waive all unsatisfied conditions, other than those dependent upon the receipt of necessary government approvals, and accept for payment and Preferred Shares that are validly tendered and not properly withdrawn on or prior to the Expiration Date; | |
| • | extend the Expiration Date and retain all tendered Preferred Shares until the purchase date for the Offer; or | |
| • | otherwise amend the Offer. |
Our failure at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, and each such right
will be deemed an ongoing right that may be asserted at any time
and from time to time. In certain circumstances, if we waive any
of the conditions described above, we may be required to extend
the Expiration Date. Any determination by us concerning the
events described above will be final and binding on all parties.
See Section 15 (“Extension of the Offer; Termination;
Amendment”).
| 8. | Price Range of Preferred Shares; No Payment of Unpaid Dividends or Distributions on Preferred Shares Accepted in the Offer. |
The Preferred Shares are listed and traded on the Nasdaq-GS
under the trading symbol “EMMSP.” The following table
sets forth, for the fiscal quarters indicated, the high and low
closing sales prices of the Preferred Shares on the Nasdaq-GS:
| High | Low | |||||||
|
FY 2010:
|
||||||||
|
First Quarter
|
$ | 2.54 | $ | 0.95 | ||||
|
Second Quarter
|
3.99 | 1.23 | ||||||
|
Third Quarter
|
17.00 | 3.56 | ||||||
|
Fourth Quarter
|
17.14 | 12.75 | ||||||
|
FY 2011:
|
||||||||
|
First Quarter
|
$ | 29.00 | $ | 13.54 | ||||
|
Second Quarter
|
25.05 | 20.00 | ||||||
|
Third Quarter
|
22.90 | 14.00 | ||||||
|
Fourth Quarter
|
19.94 | 13.00 | ||||||
|
FY 2012:
|
||||||||
|
First Quarter
|
$ | 18.50 | $ | 15.50 | ||||
|
Second Quarter
|
19.86 | 14.25 | ||||||
|
Third Quarter (through November 30, 2011)
|
17.00 | 12.75 | ||||||
We have not declared a dividend on our Preferred Shares since
October 15, 2008. As of December 1, 2011, dividends in
arrears totaled $26,709,744, or $10.22 per Preferred Share.
During the 12 months prior to November 29, 2011, the
highest reported closing sales price for the Preferred Shares on
Nasdaq-GS was $19.94, and the lowest reported closing sale price
was $12.75. Agreements governing our existing indebtedness
(including our Senior Secured Credit Facility and the Notes
Facility) prohibit us from paying dividends or distributions on
the Preferred Shares and the Common Shares, and declaration and
payment of future dividends or distributions will be at the
discretion of Emmis’ Board of Directors. Given our current
financial condition, we do not know when or if we will pay
future dividends or distributions on the Preferred Shares and as
a general matter do not expect to pay dividends or distributions
on the Preferred Shares in the foreseeable future, whether or
not the Offer is completed.
None of the Final Purchase Price will be allocated to
accumulated and unpaid dividends, and no dividend or
distributions will be paid on the Preferred Shares in connection
with the Offer. Tendering holders of the Preferred Shares
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Table of Contents
that are purchased in the Offer will no longer have any rights
in respect of the accumulated and unpaid dividends or
distributions on those Preferred Shares purchased by us.
On November 29, 2011, the last full trading day prior to the
announcement of the Offer, the last reported sale price of the
Preferred Shares on the Nasdaq-GS was $14.15 per Preferred
Share. Shareholders are strongly urged to obtain current
market quotations for the Preferred Shares.
| 9. | Source and Amount of Funds. |
Assuming that the Offer is fully subscribed, the value of
Preferred Shares purchased in the Offer will be $6,000,000. We
expect that the maximum aggregate cost of these purchases,
including all fees and expenses applicable to the Offer, will be
approximately $6,500,000. We intend to pay for the Preferred
Shares and all fees and expenses in connection with the Offer
with cash borrowed under the Note Purchase Agreement (as defined
below) upon the satisfaction of the conditions precedent to the
obligations of the lenders thereunder (the “Notes
Facility”). We have drawn approximately $28.5 million
of the funds available under the Notes Facility to acquire
rights in Preferred Shares in privately negotiated transactions
from certain holders of Preferred Shares (who remain beneficial
owners of the Preferred Shares) at varying prices pursuant to
total return swap agreements and other transaction documents. As
a result of these transactions, we have the ability to direct
the vote of 1,484,679 of the Preferred Shares.
Summary of the Note Purchase Agreement. On
November 10, 2011, Emmis entered into a Note Purchase
Agreement (the “Note Purchase Agreement”) with Zell
Credit Opportunities Master Fund, L.P. (“Zell”).
Under the Note Purchase Agreement, Zell has agreed to purchase
up to $35,000,000 of unsecured notes (the “Notes”).
The Notes, with respect to distributions upon the liquidation,
winding-up
and dissolution of the Company, rank senior to the Preferred
Shares and holders of Preferred Shares will generally not be
entitled to receive any payments in respect of their Preferred
Shares prior to the satisfaction of the claims of the
Company’s lenders under the Notes Facility. Emmis will be
permitted to sell the Notes to Zell on up to four separate
occasions on or before February 2, 2012. The net proceeds
from the Notes are expected to be used to enter into agreements
enabling Emmis to ultimately acquire its Preferred Shares. The
Note Purchase Agreement provides that Emmis may enter into
transactions with respect to Preferred Shares through privately
negotiated transactions with individual Preferred Shareholders
using a total return swap or escrow arrangement
and/or
through a tender offer.
Interest on the Notes is not payable in cash and will accrue
quarterly at a rate of 22.95 percent per annum, except that
during the continuance of any event of default the rate will be
24.95 percent per annum payable on demand in cash. The
Notes will mature on February 1, 2015.
At any time after the discharge of certain senior obligations of
Emmis and its subsidiaries described in the Note Purchase
Agreement, Emmis may, upon prior written notice to Zell, redeem
the Notes in whole or in part at a redemption price (including
with certain make-whole amounts for redemption occuring prior to
May 10, 2013) as described in the Note Purchase Agreement.
Any partial redemption of the Notes shall be in denominations of
at least $10,000,000 and in multiples of $1,000,000 in excess of
such minimum denomination.
The Note Purchase Agreement contains representations,
warranties, indemnities and affirmative and negative covenants
that are customary for agreements of its type. The negative
covenants include, without limitation, certain limitations on
the ability to: incur liens and indebtedness; consummate
mergers, consolidations or asset sales; make guarantees and
investments; and pay dividends or distributions on or make any
distributions in respect of Preferred Shares or Common Shares.
The Note Purchase Agreement also includes certain events of
default customary for agreements of its type including, among
others, the failure to make payments when due, insolvency,
certain judgments, breaches of representations and warranties,
breaches of covenants, and the occurrence of certain events,
including cross acceleration to certain other indebtedness of
Emmis and its subsidiaries, including its senior credit
facility. In addition, Emmis is required to deliver compliance
certificates demonstrating compliance with the Note Purchase
Agreement and Emmis’ senior credit facility.
Emmis’ initial drawing under the Note Purchase Agreement
has already occurred and Emmis may draw additional funds upon
satisfaction of certain conditions, including: the delivery of a
purchase notice; the correctness of the representations and
warranties contained in the Note Purchase Agreement the original
aggregate principal amount of the Notes issued on the applicable
purchase date, taken together with all other Notes previously
purchased shall not exceed
19
Table of Contents
$35,000,000; and the purchaser shall have been registered in the
note register and the purchaser shall have received customary
closing deliveries.
The Note Purchase Agreement is filed as Exhibit (b) to the
Tender Offer Statement on Schedule TO filed by Emmis with
the SEC on December 1, 2011, and this summary is qualified
in its entirety by reference to that agreement. You should read
the Note Purchase Agreement in its entirety.
The Company will incur increased indebtedness under the Notes
Facility in connection with the Offer and, as a result, will be
more leveraged. Increased leverage could have certain material
adverse effects on the Company, including, but not limited to,
reducing the Company’s financial flexibility and causing
rating agencies to downgrade, place on negative watch or change
their outlook on our debt credit rating generally. Any such
downgrade, placement on negative watch or change in outlook
could also adversely affect our cost of borrowing, limit our
access to the capital markets or result in more restrictive
covenants in future debt agreements.
Our ability to repay expected obligations under the Note
Purchase Agreement, and to meet our other debt or contractual
obligations (including compliance with applicable financial
covenants) will depend upon our future performance and our cash
flow from operations, both of which are subject to prevailing
economic conditions and financial, business and other known and
unknown risks and uncertainties, certain of which are beyond our
control. These factors include, without limitation, those
described in this Offer to Purchase under “Forward-Looking
Statements” and the risks detailed in the “Risk
Factors” section and other sections of our Annual Report on
Form 10-K
for the fiscal year ended February 28, 2011, and the
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” section of our
Quarterly Reports filed on
Form 10-Q
for the quarter ended May 31, 2011 and August 31, 2011
and other filings with the SEC.
| 10. | Certain Information Concerning Us. |
We are a diversified media company, principally focused on radio
broadcasting. We operate the 8th largest publicly traded radio
portfolio in the United States based on total listeners. As of
September 1, 2011, we owned and operated four FM radio
stations serving the nation’s top two markets —
New York, New York and Los Angeles, California, although one of
our FM radio stations in Los Angeles is operated pursuant to a
Local Marketing Agreement (LMA) whereby a third party provides
the programming for the station and sells all advertising within
that programming. Additionally, we own and operate fourteen FM
and two AM radio stations with strong positions in
St. Louis, Missouri, Austin, Texas (we have a 50.1%
controlling interest in our radio stations located there),
Indianapolis, Indiana and Terre Haute, Indiana. In addition to
our domestic radio properties, we operate an international radio
business and publish several city and regional magazines.
Internationally, we own and operate national radio networks in
Slovakia and Bulgaria. Our publishing operations consist of
Texas Monthly, Los Angeles, Atlanta,
Indianapolis Monthly, Cincinnati, Orange Coast,
and Country Sampler and related magazines. We also
engage in various businesses ancillary to our broadcasting
business, such as website design and development, digital sales
consulting and operating a news information radio network in
Indiana.
Availability of Reports and Other
Information. We are subject to the informational
filing requirements of the Exchange Act which obligates us to
file reports, statements and other information with the SEC
relating to our business, financial condition and other matters.
Information, as of particular dates, concerning our directors
and officers, their remuneration, options granted to them, the
principal holders of our securities and any material interest of
these persons in transactions with us is required to be
disclosed in proxy statements distributed to our shareholders
and filed with the SEC. As required by Exchange Act
Rule 13e-4(c)(2),
we have also filed with the SEC the Schedule TO on
December 1, 2011, which includes additional information
relating to the Offer.
These reports, statements and other information can be inspected
and copied at the public reference facilities maintained by the
SEC at 100 F Street, N.E., Washington, D.C.
20549. Copies of this material may also be obtained by mail,
upon payment of the SEC’s customary charges, from the
Public Reference Section of the SEC at 100 F Street,
N.E., Washington, D.C. 20549. The SEC also maintains a
website on the Internet at www.sec.gov that contains reports,
proxy and information statements and other information regarding
registrants that file electronically with the SEC, including the
Schedule TO and documents incorporated by reference. You
may obtain information about the Public Reference Room by
calling the SEC for more information at
1-800-SEC-0330.
20
Table of Contents
Incorporation by Reference. The rules of the
SEC allow us to “incorporate by reference” information
into this document, which means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. We incorporate by reference each of the
following documents:
|
SEC Filings
|
Date(s) Filed
|
|
| Annual Report on Form 10-K for the fiscal year ended February 28, 2011 | May 10, 2011 | |
|
Quarterly Reports on
Form 10-Q
|
July 13, 2011 and October 13, 2011 | |
|
Current Reports on
Form 8-K
|
March 11, 2011, March 30, 2011, April 21, 2011, June 3, 2011, June 21, 2011 (other than Item 7.01 thereof), June 24, 2011, July 18, 2011, September 2, 2011, October 5, 2011, November 14, 2011, November 15, 2011, November 16, 2011, and November 22, 2011 | |
| Definitive Proxy Statement for our 2011 annual meeting of shareholders | June 3, 2011 |
Any statement contained in any document incorporated by
reference into this Offer to Purchase shall be deemed to be
modified or superseded to the extent that an inconsistent
statement is made in this Offer to Purchase or any subsequently
filed document. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to
constitute a part of this Offer to Purchase.
You can obtain any of the documents incorporated by reference in
this document from us or from the SEC’s website at the
address described above. Documents incorporated by reference are
available from us without charge, excluding any exhibits to
those documents, at our principal executive office located at
One Emmis Plaza, 40 Monument Circle, Suite 700,
Indianapolis, IN 46204. Please be sure to include your complete
name and address in your request. If you request any
incorporated documents, we will promptly mail them to you by
first class mail, or another equally prompt means. You may also
find additional information by visiting our website at
www.emmis.com. Information on our website does not form part of
the Offer and is not incorporated by reference in this Offer to
Purchase.
| 11. | Certain Financial Information |
Historical Financial Information. We
incorporate by reference the financial statements and notes
thereto included in Part II, Item 8 of our Annual
Report on
Form 10-K
for the fiscal year ended February 28, 2011. In addition,
we incorporate by reference the unaudited financial information
included in Part I, Item 1 of our Quarterly Report
filed on
Form 10-Q
for the quarter ended May 31, 2011, and the unaudited
financial information included in Part I, Item 1 of
our Quarterly Report filed on
Form 10-Q
for the quarter ended August 31, 2011. You should refer to
Section 10 (“Certain Information Concerning Us”)
for instructions on how you can obtain copies of our SEC
filings, including filings that contain our financial statements.
Summary Historical Consolidated Financial
Data. The following tables set forth our summary
historical consolidated financial data for the fiscal years
ended February 28, 2010 and February 28, 2011 and the
six-month period ended August 31, 2011. This financial data
has been derived from, and should be read in conjunction with
the audited consolidated financial statements and the related
notes filed as part of our Annual Report on
Form 10-K
for the year ended February 28, 2011 and the unaudited
condensed consolidated financial statements and the related
notes filed as part of our Quarterly Reports on
Form 10-Q
for the quarters ended May 31, 2011 and August 31,
2011. Financial data for the six months ended August 31,
2011 and the selected ratios are unaudited and, in the opinion
of our management, include
21
Table of Contents
all adjustments necessary for a fair presentation of the data.
Historical results are not necessarily indicative of the results
of operations to be expected for the future periods, and interim
results may not be indicative of results for the full year.
| August 31, 2011 | ||||
|
(In thousands, except |
||||
| per share data) | ||||
|
Consolidated Balance Sheet Data:
|
||||
|
Total current assets
|
$ | 67,784 | ||
|
Total noncurrent assets, including intangible assets of $355,087
|
403,411 | |||
|
Total assets
|
$ | 471,195 | ||
|
Total current liabilities
|
$ | 50,539 | ||
|
Total noncurrent liabilities, including long term debt of
$330,072
|
428,955 | |||
|
Total liabilities
|
479,494 | |||
|
6.25% Series A Cumulative Convertible Preferred Stock
|
140,459 | |||
|
Shareholders’ deficit
|
(197,048 | ) | ||
|
Noncontrolling interests
|
48,290 | |||
|
Total deficit
|
(148,758 | ) | ||
|
Total liabilities and deficit
|
$ | 471,195 | ||
|
Book value per share
|
$ | (5.16 | ) | |
|
Six Months |
||||||||||||
|
Ended |
||||||||||||
|
August 31, |
Year Ended February 28, | |||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| (In thousands, except per share and ratio data) | ||||||||||||
|
Consolidated Statement of Income Data:
|
||||||||||||
|
Net revenue
|
$ | 125,767 | $ | 251,314 | $ | 242,566 | ||||||
|
Impairment loss
|
— | 7,005 | 174,642 | |||||||||
|
Depreciation and amortization
|
4,221 | 9,392 | 10,393 | |||||||||
|
Total operating expenses
|
116,822 | 232,093 | 408,052 | |||||||||
|
Net loss attributable to common shareholders
|
(13,145 | ) | (25,269 | ) | (131,777 | ) | ||||||
|
Earnings (loss) per share
|
||||||||||||
|
Basic
|
$ | (0.34 | ) | $ | (0.67 | ) | $ | (3.56 | ) | |||
|
Diluted
|
$ | (0.34 | ) | $ | (0.67 | ) | $ | (3.56 | ) | |||
|
Weighted average common shares outstanding
|
||||||||||||
|
Basic
|
38,205 | 37,863 | 37,041 | |||||||||
|
Diluted
|
38,205 | 37,803 | 37,041 | |||||||||
|
Other Data
|
||||||||||||
|
Ratio of earnings to fixed
charges1
|
N/A | N/A | N/A | |||||||||
| 1 | Earnings were insufficient to cover fixed charges by $13,406 in the six months ended August 31, 2011, and by $18,508 and $127,398 in the years ended February 28, 2011 and 2010, respectively. |
Recent Developments. As previously announced,
on September 1, 2011, we completed the disposition of a
controlling interest in Merlin Media, LLC, which owns
WKQX-FM,
101.1 MHz, Channel 266, Chicago, IL (FIN 19525),
WRXP-FM,
101.9 MHz, Channel 270, New York, NY
(FIN 67846) and
WLUP-FM,
97.9 MHz, Channel 250, Chicago, IL (FIN 73233). We
received gross cash sale proceeds of $130.0 million in the
transaction, and we have incurred or expect to incur
approximately $9.8 million of expenses, principally
consisting of severance, state and local taxes, and professional
and other fees and expenses. We used the net cash proceeds to
repay a portion of the term loans outstanding under our credit
facility. We also paid a $2.0 million exit fee to Canyon
related to the repayment of the term loans on September 1,
22
Table of Contents
2011. In addition to the cash proceeds, Emmis retained preferred
equity interests of approximately $28.7 million (at par)
and 20.6% of the initial outstanding common equity interests.
As a result of those transactions, our total indebtedness, which
was $333.3 million on August 31, 2011, was reduced to
$213.1 million as of September 1, 2011. Our total
assets decreased from $471.2 million on August 31,
2011 to $397.8 million as of September 1, 2011. Our
net revenues, which were $307.9 million,
$242.6 million, $251.3 million and $125.8 million
for the fiscal years ended February 28, 2009, 2010 and 2011
and the six months ended August 31, 2011, respectively,
would have been $283.5 million, $219.7 million,
$226.0 million and $116.1 million for those same
periods, had the transactions occurred as of the first day of
each respective fiscal period. Our operating income (loss),
which was $(339.3) million, $(165.5) million,
$19.2 million and $8.9 million for the fiscal years
ended February 28, 2009, 2010 and 2011 and the six months
ended August 31, 2011, respectively, would have been
$(177.6) million, $(83.7) million, $17.8 million
and $11.4 million for those same periods, had the
transactions occurred as of the first day of each respective
fiscal period. While the above results are based on estimates
that management believes are reasonable, the above results are
presented for informational purposes only and do not reflect
“pro forma” adjustments in accordance with
Article 11 of
Regulation S-X.
Furthermore, such results are not necessarily indicative of the
results that may be experienced in any future periods.
In addition, as described above under Section 9
(“Source and Amount of Funds”), we have entered into
the Note Purchase Agreement, which has provided us with the
ability to sell to Zell up to $35,000,000 aggregate principal
amount of Notes. To date, we have sold Zell approximately
$28.5 million aggregate principal amount of Notes and have
used the proceeds from those Notes to acquire rights in
1,681,429 Preferred Shares at a weighted average price of $15.56
per share and to pay $2.3 million in fees and expenses. As
a result of these transactions, pursuant to voting agreements
and other similar arrangements, we have the ability to direct
the vote of 1,484,679 of the Preferred Shares. We may enter into
additional transactions with respect to the Preferred Shares in
the future.
| 12. | Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares of the Company. |
Beneficial Ownership. As of December 1,
2011, we had approximately 2,612,420 Preferred Shares
outstanding. We are offering to purchase up to $6,000,000 in
value of Preferred Shares. At the maximum Final Purchase Price
of $15.56 per Preferred Share, we could purchase 385,604
Preferred Shares if the Offer is fully subscribed, which would
represent approximately 14.8% of the issued and outstanding
Preferred Shares as of December 1, 2011. At the minimum
Final Purchase Price of $12.50 per Preferred Share, we could
purchase 480,000 Preferred Shares if the Offer is fully
subscribed, which would represent approximately 18.4% of the
issued and outstanding Preferred Shares as of December 1,
2011.
As of December 1, 2011, there were 33,503,666 shares
of Class A Common Stock and 4,722,684 shares of
Class B Common Stock issued and outstanding. The holders of
Class A Common Stock are entitled to an aggregate of
33,503,666 votes, and the holder of Class B Common Stock is
entitled to an aggregate of 47,226,840 votes. As of
December 1, 2011, our directors and executive officers as a
group (12 persons) beneficially owned an aggregate of
3,432,559 shares of our Class A Common Stock (which
number includes 1,710,697 shares of Class A Common
Stock subject to options and restricted stock units that are
exercisable or will vest, as applicable, within 60 days
after the date of this Offer to Purchase), or approximately
10.3% of the total outstanding shares of Class A Common
Stock. As of December 1, 2011, our directors and officers
as a group (12 persons) beneficially owned an aggregate of
5,893,480 shares of our Class B Common Stock (which
number includes 1,170,796 represented by stock options
exercisable currently or within 60 days of December 1,
2011). As of December 1, 2011, our directors and officers
as a group (12 persons) beneficially owned an aggregate of
1,000 shares of our Preferred Shares. Our directors and
executive officers are entitled to participate in the Offer on
the same basis as all other shareholders. No director, executive
officer or holder of 10% or more of the total voting power of
the Common Shares of Emmis intends to tender Preferred Shares
into the Offer. The 1,484,679 Preferred Shares whose vote we are
currently able to direct pursuant to agreements we entered into
previously with holders of those shares constitute approximately
56.83% of the Preferred Shares outstanding as of
December 1, 2011. We do not intend to cause these Preferred
Shares to be tendered in the Offer.
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The following table shows, as of December 1, 2011, the
number and percentage of our Preferred Shares and Common Shares
held by each person known to us to own beneficially more than
five percent of the issued and outstanding Preferred Shares or
Common Shares, by the executive officers named in the Beneficial
Ownership Table below and our directors and nominees, and by our
executive officers and directors as a group. Unless otherwise
specified, the address of each person listed is: One Emmis
Plaza, 40 Monument Circle, Suite 700, Indianapolis, IN
46204.
|
Class A |
Class B |
|||||||||||||
| Common Stock | Common Stock | 6.25% Series A Cumulative Convertible Preferred Stock | ||||||||||||
|
Amount and |
Amount and |
Amount and |
Percent of |
|||||||||||
|
Five Percent Shareholders, |
Nature of |
Nature of |
Nature of |
Total Voting |
||||||||||
|
Directors, Nominees and |
Beneficial |
Percent of |
Beneficial |
Percent of |
Beneficial |
Percent of |
Power |
|||||||
|
Certain Executive Officers
|
Ownership | Class | Ownership | Class | Ownership | Class | ||||||||
|
Jeffrey H. Smulyan
|
209,290(1) | * | 5,893,480(16) | 100.0% | — | — | 64.0% | |||||||
|
Susan B. Bayh
|
191,476(2) | * | — | — | — | — | * | |||||||
|
Richard F. Cummings
|
560,545(3) | 1.7% | — | — | — | — | * | |||||||
|
David Gale
|
8,195(4) | * | — | — | 1,000(17) | * | * | |||||||
|
Gary L. Kaseff
|
522,488(5) | 1.5% | — | — | — | — | * | |||||||
|
Richard A. Leventhal
|
350,498(6) | 1.0 | — | — | — | — | * | |||||||
|
Peter A. Lund
|
353,626(7) | 1.1 | — | — | — | — | * | |||||||
|
Greg A. Nathanson
|
528,219(8) | 1.6% | — | — | — | — | * | |||||||
|
Lawrence B. Sorrel
|
392,184(10) | 1.2 | — | — | — | — | * | |||||||
|
Patrick M. Walsh
|
360,072(11) | * | — | — | — | — | * | |||||||
|
J. Scott Enright
|
85,863(12) | * | — | — | — | — | * | |||||||
|
Gregory T. Loewen
|
56,642(13) | * | — | — | — | — | * | |||||||
|
AQR Capital Management LLC
|
2,852,187(14) | 8.5% | — | — | — | — | 3.5% | |||||||
| All Executive Officers and Directors as a Group (12 persons) | 3,432,559(15) | 10.3% | 5,893,480(16) | 100.0% | 1,000 | * | 66.4% | |||||||
| * | Less than 1%. | |
| (1) | Consists of 8,441 shares held in the 401(k) Plan, 9,755 shares owned individually, 11,120 shares held by Mr. Smulyan as trustee for his children over which Mr. Smulyan exercises or shares voting control, 3,000 shares held by Mr. Smulyan as trustee for his niece over which Mr. Smulyan exercises or shares voting control, 30,625 shares held by The Smulyan Family Foundation, over which Mr. Smulyan shares voting control and 146,349 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. | |
| (2) | Consists of 115,863 shares owned individually and 75,613 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. Of the shares owned individually, 6,585 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (3) | Consists of 150,718 shares owned individually, 8,260 shares owned for the benefit of Mr. Cummings’ children, 6,429 shares held in the 401(k) Plan and 395,138 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. | |
| (4) | Consists of 8,195 shares owned individually. Of the shares owned individually, 2,195 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (5) | Consists of 149,466 shares owned individually by Mr. Kaseff, 3,411 shares owned by Mr. Kaseff’s spouse, 1,346 shares held by Mr. Kaseff’s spouse for the benefit of their children, 2,395 shares held in the 401(k) Plan, and 365,870 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. Of the shares owned individually, 4,390 are restricted stock subject to forfeiture if certain employment agreement or other conditions are not satisfied. | |
| (6) | Consists of 251,847 shares owned individually, 3,000 shares owned by Mr. Leventhal’s spouse, 17,600 shares owned by a corporation of which Mr. Leventhal is a 50% shareholder and 78,051 shares represented by stock options |
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| exercisable currently or within 60 days of December 1, 2011. Of the shares owned individually, 2,195 are restricted stock subject to forfeiture if certain conditions are not satisfied. | ||
| (7) | Consists of 290,210 shares owned individually and 63,416 shares represented by stock options exercisable currently or within 60 days of September 12, 2011. Of the shares owned individually, 2,195 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (8) | Consists of 406,168 shares owned individually or jointly with his spouse, 44,000 shares owned by trusts for the benefit of Mr. Nathanson’s children and 78,051 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. Of the shares owned individually, 4,390 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (9) | Consists of 2,195 shares owned individually. Of the shares owned individually, 2,195 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (10) | Consists of 314,133 shares owned individually and 78,051 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. Of the shares owned individually, 2,195 are restricted stock subject to forfeiture if certain conditions are not satisfied. | |
| (11) | Consists of 36,899 shares owned individually, 4,017 shares held in the 401(k) Plan and 323,173 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. | |
| (12) | Includes 73,985 vested shares. Information concerning these shares was provided by the Company. | |
| (13) | Includes 33,000 vested shares. Information concerning these shares was provided by the Company. | |
| (14) | Information concerning these shares was obtained from a Schedule 13G filed on February 11, 2011, by AQR Capital Management, LLC, which has a mailing address of Two Greenwich Plaza, 3rd Floor, Greenwich, Connecticut 06830. | |
| (15) | Includes 1,710,697 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. | |
| (16) | Consists of 4,722,684 shares owned individually and 1,170,796 shares represented by stock options exercisable currently or within 60 days of December 1, 2011. | |
| (17) | Information concerning these shares was provided by the Company. |
Securities Transactions. Based on our records
and on information provided to us by our directors, executive
officers, affiliates and subsidiaries, neither we nor any of our
directors, our executive officers, or our affiliates or our
subsidiaries nor, any person controlling the Company or any
executive officer or director of any such controlling entity or
of our subsidiaries, has effected any transactions involving our
securities during the 60 days prior to December 1,
2011, except for the following transactions:
Acquisition of Rights in Preferred Shares. As
described above under Section 9 (“Source and Amount of
Funds”), we have entered into the Note Purchase Agreement,
which has provided us with the ability to sell to Zell up to
$35,000,000 aggregate principal amount of Notes. To date, we
have sold Zell approximately $28.5 million aggregate
principal amount of Notes and have used the proceeds from those
Notes to acquire rights in 1,681,429 Preferred Shares at a
weighted average price of $15.56 per share and to pay
$2.3 million in fees and expenses. We have entered into
confirmations for total return swaps and voting agreements with
Valinor Credit Partners Master Fund, L.P., Sugarloaf Rock
Capital, LLC, Third Point Ultra Master Fund L.P., Third
Point Partners Qualified L.P., Third Point Offshore Master
Fund L.P., Third Point Partners L.P. and Alden Global
Distressed Opportunities Master Fund, L.P. and pursuant to these
agreements and arrangements and as a result of these
transactions, we have the ability to direct the vote of
1,484,679 of the Preferred Shares.
The confirmations for the total return swaps are longform
confirmations governed by a form of ISDA 2002 Master Agreement.
The swaps provide that in return for payment of the
consideration, we will be entitled to receive all payments and
other consideration received by the counterparty from us in
respect of the counterparty’s Preferred Shares. Until
settlement of the swaps, the counterparty will continue to hold
legal title and record ownership of the Preferred Shares but
will be required to vote the Preferred Shares as directed by us
pursuant to the corresponding voting agreement. The swaps will
settle physically by delivery of the counterparty’s
Preferred Shares to us upon written notice of termination by us
(or on any other applicable disruption or termination event).
The total return swap confirmations and voting agreements
described above will be filed as Exhibits (d)(1) through (d)(14)
in an amendment to the Tender Offer Statement on
Schedule TO filed by Emmis with the SEC on December 1,
2011, and this summary is qualified in its entirety by reference
to those agreements. You should read the total return swap
confirmations and voting agreements in their entirety.
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Table of Contents
Share Repurchase Program. On August 8,
2007, Emmis’ Board of Directors authorized a share
repurchase program pursuant to which Emmis is authorized to
purchase up to an aggregate value of $50 million of its
outstanding Class A Common Stock within the parameters of
SEC
Rule 10b-18.
On May 22, 2008, Emmis’ Board of Directors revised the
share repurchase program to allow for the repurchase of both
Class A Common Stock and Preferred Shares. Under the plan,
transaction may occur from time to time, either on the open
market or through privately negotiated transactions. Stock
repurchase under the plan is subject to prevailing market
conditions and other considerations and are expected to be
financed through cash flows from operations and borrowings under
Emmis’ existing credit facility. During the three-month
period ended August 31, 2011, there were no repurchases of
shares of Class A Common Stock or Preferred Shares pursuant
to the share repurchase program.
Equity Incentive Plans. The Company has stock
options, restricted stock and restricted stock unit grants
outstanding that were issued to employees or non-employee
directors under one or more of the following plans: 1999 Equity
Incentive Plan, 2001 Equity Incentive Plan, 2002 Equity
Incentive Plan, the 2004 Equity Compensation Plan and the 2010
Equity Compensation Plan. These outstanding grants continue to
be governed by the terms of the applicable plan.
At the 2010 annual meeting, the shareholders of the Company
approved the 2010 Equity Compensation Plan (the
“Plan”). Under the Plan, awards equivalent to
2.0 million shares of Class A Common Stock and
Class B Common Stock may be granted. Furthermore, any
unissued awards from the 2004 Equity Compensation Plan (or
shares subject to outstanding awards that would again become
available for awards under the Plan) increases the number of
shares of common stock available for grant under the Plan. The
awards, which have certain restrictions, may be for incentive
stock options, nonqualified stock options, shares of restricted
stock, restricted stock units, stock appreciation rights or
performance units. Under the Plan, all awards are granted with a
purchase price equal to at least the fair market value of the
stock except for shares of restricted stock and restricted stock
units, which may be granted with any purchase price (including
zero). The stock options under the Plan generally expire not
more than 10 years from the date of grant. Under the Plan,
awards equivalent to approximately 2.6 million shares of
common stock were available for grant at February 28, 2011.
Options. Options granted under the Plan allow
participants to purchase shares of our common stock at an
exercise price determined by the Company’s compensation
committee (the “Compensation Committee”) which cannot
be less than the fair market value of our common stock on the
date of the grant. The Plan contains a per-participant limit of
300,000 on the number of shares which may be subject to options
granted during any calendar year.
Restricted Stock. Shares of our common stock
may be granted under the Plan subject to such restrictions, if
any, as may be determined by the Compensation Committee
(“restricted stock”). Shares of restricted stock may
be subject to forfeiture if conditions established by the
Compensation Committee are not satisfied and are generally
nontransferable until they become nonforfeitable. Before the
grant, the Compensation Committee determines the purchase price,
if any, of such shares of restricted stock and the restrictions,
if any, applicable to such shares. If a grantee’s shares of
restricted stock are forfeited, the grantee is required to sell
such shares to us at the lesser of the purchase price, if any,
paid by the grantee or the fair market value of the shares on
the date of such forfeiture. The Compensation Committee may
accelerate the time at which the restrictions lapse or may
remove or, with the consent of the grantee, modify the
restrictions. The 2010 Plan contains a per-participant limit on
the number of shares of restricted stock that may be awarded
during any calendar year. That limit is the number of shares
having a value on the date of grant equal to the lesser of 500%
of the participant’s base salary or $5,000,000. This limit
does not apply, however, to restricted stock issued in payment
of an award of performance units or issued in lieu of cash
compensation under a stock compensation-type program.
Stock Appreciation Rights. Each stock
appreciation right which may be granted under the Plan provides
the grantee, upon exercise, a benefit equal to the difference
between the fair market value of one share of our common stock
on the date of the exercise and (1) in the case of a stock
appreciation right identified with a share of our common stock
subject to an option, the option exercise price of such option
or such higher price specified in the grant or (2) in the
case of any other stock appreciation right, the fair market
value of a share of our Class A Common Stock or
Class B Common Stock on the grant date or such higher price
specified in the grant. Stock appreciation rights may be granted
alone, or identified with shares of our Class A Common
Stock or Class B Common Stock subject to options,
performance units or shares of restricted stock. The
Compensation Committee may accelerate the exercisability of any
stock appreciation right. Benefits upon the exercise of stock
appreciation rights are payable in cash unless the Compensation
Committee determines that the benefits will be paid wholly or
partly in shares of our Class A Common Stock or
Class B Common Stock. The Plan
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Table of Contents
contains a per-participant limit of 300,000 on the number of
shares which may be subject to stock appreciation rights granted
during any calendar year.
Performance Units. Performance units may be
granted under the Plan to provide a benefit if performance goals
determined by the Compensation Committee are achieved during the
measuring period. The Compensation Committee, before the grant
of a performance unit, determines the performance goals and
measuring period and assigns a performance percentage (which can
exceed 100%) to each level of attainment of the performance
goals during the measuring period. Performance unit benefits are
payable in cash unless the Compensation Committee determines
that a benefit will be paid wholly or partly in shares of our
Class A Common Stock or Class B Common Stock.
Performance units only reduce the number of shares available for
grant or issuance under the 2010 Plan to the extent that the
performance unit award is paid in stock. Performance unit awards
are payable after the end of the fiscal year in which the
measuring period ends following a certification by the
Compensation Committee of the extent to which the applicable
performance goals have been achieved. The benefit for each
performance unit awarded equals the fair market value of a share
of our common stock on the date of grant of the performance unit
multiplied by the “performance percentage” attained
during the measuring period for the performance unit. The Plan
contains a per-participant limit on the number of shares of
stock that may be awarded with respect to a performance unit
during any calendar year. That limit is the number of shares
having a value on the date of grant equal to the lesser of 500%
of the participant’s base salary or $5,000,000.
Other Information. Payment of the option
exercise price or the purchase price of restricted stock may be
made in cash or through the exchange of shares of our
Class A Common Stock or Class B Common Stock owned by
the grantee or by various other payment methods. When permitted
by the Compensation Committee, a grantee may elect to have
withheld shares of our common stock to satisfy withholding tax
liability with respect to the exercise of options, stock
appreciation rights or performance units or with respect to
shares of restricted stock becoming nonforfeitable. In the event
of a change in control, options, stock appreciation rights and
performance units become exercisable, and all shares of
restricted stock generally become nonforfeitable. The benefit
payable with respect to any performance unit for which the
measuring period has not ended is prorated based upon the
portion of the measuring period completed before the change in
control. The aggregate number of our Common Shares, shares of
restricted stock, stock appreciation rights and stock options
available pursuant to the Plan, the number of shares covered by
an award, the exercise price of options, the fair market values
used to determine stock appreciation right and performance unit
benefits and other matters related to the Plan and awards, will
be adjusted by the Compensation Committee to reflect any stock
dividend, stock split, share combination, merger, consolidation,
asset spin-off, reorganization, or similar event.
Director Equity Compensation. Directors who
are not officers of the Company are compensated for their
services at the rate of $3,000 per regular meeting attended in
person, $1,500 per regular meeting attended by phone and $2,000
per committee meeting attended, whether in person or by phone.
These fees are paid in the form of Class A Common Stock at
the end of each calendar year. The per share price used for
payment of these fees is established using the market value of
Class A Common Stock prior to the end of the previous
fiscal year, discounted by 20% to the extent the director
attends at least 75% of the board and committee meetings
applicable to the director. In addition, each director who is
not an officer or employee of the Company receives a $30,000
annual retainer, the chair of our Audit Committee receives a
$10,000 annual retainer, the chair of our Compensation Committee
receives a $5,000 annual retainer, the chair of our Corporate
Governance and Nominating Committee receives a $3,000 annual
retainer, and the Lead Director receives a $3,000 annual
retainer. These annual retainers are paid in cash or shares of
Class A Common Stock at each director’s election. In
addition, directors who are not officers of the Company are
entitled to receive annually 2,195 shares of restricted
stock and options to purchase 7,317 shares of Class A
Common Stock. The options are granted on the date of our annual
meeting of shareholders at the fair market value of the
underlying shares on that date and are to vest annually in three
equal installments. Restricted stock is also granted on the date
of our annual meeting of shareholders and will vest on the
earlier of the end of the director’s three-year term or the
third anniversary of the date of grant.
Emmis Retirement and Savings Plan. The Company
sponsors a Section 401(k) retirement savings plan that is
available to substantially all employees age 18 years
and older, including our executive officers, who have at least
30 days of service. Employees may make pretax contributions
to the plans up to 50% of their compensation, not to exceed the
annual limit prescribed by the Internal Revenue Service (the
“IRS”). The Company may make discretionary matching
contributions to the plans in the form of cash or shares of our
Class A Common Stock. During the year ended
February 28, 2009, we elected to match annual employee
401(k) contributions up to a maximum of $1,000 per employee,
made in Emmis Class A Common Stock. No discretionary 401(k)
matching contributions were made during the year ended
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Table of Contents
February 28, 2010. In April 2010, we reinstated the
discretionary 401(k) match. Employee contributions have been
matched at 33% up to a maximum of 6% of eligible compensation.
The Company’s discretionary contributions to the Plan
totaled $0.9 million and $1.1 million for the years
ended February 28, 2010 and February 28, 2011,
respectively.
Employment Agreements. From time to time, the
Company enters into employment agreements with certain senior
executive officers, under which performance bonuses may be
payable either in cash or in Class A Common Stock, at our
discretion. The Company has entered into such employment
agreements with Mr. Jeffrey Smulyan, who serves as
Chairman, Chief Executive Officer and President, Patrick Walsh,
who serves as Chief Financial Officer and Chief Operating
Officer, and with Mr. Richard Cummings, who serves as
President of Emmis Radio Programming.
The foregoing descriptions of agreements and arrangements
involving the Preferred Shares and Common Shares are qualified
in their entirety by reference to the text of the respective
agreements and arrangements, copies of which have been filed
with the SEC.
Except as otherwise described herein, neither we nor any of our
affiliates, directors or executive officers, is a party to any
contract, agreement, arrangement, understanding or relationship
with any other person with respect to any of our securities.
| 13. | Certain Legal Matters; Regulatory Approvals. |
Under Indiana law and our certificate of incorporation, holders
of Preferred Shares are not entitled to appraisal rights with
respect to the Offer. We are not aware of any license or
regulatory permit that is reasonably likely to be material to
our business that might be adversely affected by our acquisition
of Preferred Shares as contemplated in the Offer or of any
approval or other action by any government or governmental,
administrative or regulatory authority or agency, domestic,
foreign or supranational, that would be required for our
acquisition or ownership of Preferred Shares as contemplated by
the Offer. Should any approval or other action be required, we
presently contemplate that we will seek that approval or other
action, but we have no current intention to delay the purchase
of Preferred Shares tendered pursuant to the Offer pending the
outcome of any such matter, subject to our right to decline to
purchase Preferred Shares if any of the conditions in
Section 7 (“Conditions of the Offer”) have
occurred or are deemed by us to have occurred or have not been
waived. We cannot predict whether we would be required to delay
the acceptance for payment of or payment for Preferred Shares
tendered pursuant to the Offer pending the outcome of any such
matter. Any approval or other action, if needed, may not be
obtained or may not be able to be obtained without substantial
cost or conditions. Furthermore, the failure to obtain the
approval or other action might result in adverse consequences to
our business and financial condition. If certain types of
adverse actions are taken with respect to the matters discussed
above, or certain approvals, consents, licenses or permits
identified above are not obtained, we can decline to accept for
payment or pay for any Preferred Shares tendered. See
Section 7 (“Conditions of the Offer”).
| 14. | Material United States Federal Income Tax Consequences. |
The following discussion describes the material United States
federal income tax consequences of participating in the Offer
for U.S. Holders and
non-U.S. Holders
(each as defined below). This summary is based upon the Internal
Revenue Code of 1986, as amended (the “Code”), United
States Treasury Regulations issued thereunder, IRS rulings and
pronouncements, and judicial decisions, all as of the date
hereof and all of which are subject to differing interpretations
or change which could affect the tax consequences described in
this Offer to Purchase (possibly on a retroactive basis). This
discussion is for general information only and does not address
all of the aspects of United States federal income taxation that
may be relevant to a particular shareholder or to shareholders
subject to special rules (including, without limitation, banks,
financial institutions, brokers, dealers or traders in
securities or commodities, traders who elect to apply a
mark-to-market
method of accounting, insurance companies, “S”
corporations, real estate investment trusts or regulated
investment companies, partnerships or other pass-through
entities, controlled foreign corporations, passive foreign
investment companies, U.S. expatriates, tax-exempt
organizations, tax-qualified retirement plans, persons who are
subject to the alternative minimum tax, persons who hold
Preferred Shares as a position in a “straddle” or as
part of a “hedging,” “conversion” or
“integrated” transaction or other risk reduction
strategy, directors, employees, former employees or other
persons who acquired their Preferred Shares as compensation,
including upon the exercise of employee stock options, and
persons that have a functional currency other than the United
States dollar). In particular, this summary does not address any
tax consequences arising from the sale of Preferred Shares
acquired pursuant to our employee stock purchase plan or
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other employee benefit plans. This summary also does not address
tax considerations arising under any state, local or foreign
laws, or under United States federal estate or gift tax laws.
This summary assumes that shareholders hold the Preferred Shares
as “capital assets” within the meaning of
Section 1221 of the Code (generally, property held for
investment). No legal opinion from U.S. legal counsel has
been or will be sought or obtained regarding the
U.S. federal income tax consequences of the Offer. In
addition, this discussion is not binding on the IRS, and no
ruling has been or will be sought or obtained from the IRS with
respect to any of the U.S. federal income tax consequences
discussed in this Offer to Purchase. There can be no assurance
that the IRS will not challenge any of the conclusions described
in this Offer to Purchase or that a U.S. court will not
sustain such a challenge. As used herein, the term
“U.S. Holder” means a beneficial owner of
Preferred Shares that is:
| • | an individual who is a citizen or resident of the United States for United States federal income tax purposes; | |
| • | a corporation (or other entity taxable as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
| • | an estate, the income of which is subject to United States federal income taxation regardless of its source; or | |
| • | a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more “United States persons” within the meaning of Section 7701(a)(30) of the Code has the authority to control all substantial decisions of the trust, or, if the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
As used herein, the term
“non-U.S. Holder”
means a beneficial owner of Preferred Shares other than a
U.S. Holder.
If a pass-through entity, including a partnership or other
entity taxable as a partnership for U.S. federal tax
purposes, holds Preferred Shares, the U.S. federal income
tax treatment of an owner or partner generally will depend on
the status of such owner or partner and on the activities of the
pass-through entity. This summary does not address any
U.S. federal income tax issues that may be peculiar to a
U.S. person that owns Preferred Shares through a
pass-through entity, and a U.S. person that is an owner or
partner of a pass-through entity holding Preferred Shares is
urged to consult its own tax advisor.
Each shareholder is urged to consult his or her tax advisor
as to the particular United States federal income tax
consequences to such shareholder of participating or not
participating in the Offer and the applicability and effect of
any state, local and foreign tax laws and other tax consequences
with respect to the Offer.
Non-Participation
in the Offer.
The Offer will have no United States federal income tax
consequences to shareholders that do not tender any Preferred
Shares in the Offer.
Consequences
of the Offer to U.S. Holders.
Characterization of the Purchase — Sale or Exchange
vs. Distribution. The exchange of Preferred
Shares for cash pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes. A
U.S. Holder that participates in the Offer will be treated,
depending on such U.S. Holder’s particular
circumstances, either as recognizing gain or loss from the
disposition of the Preferred Shares purchased by us or as
receiving a dividend distribution from us in respect of our
stock as described in more detail below.
Under the stock redemption rules of Section 302 of the
Code, a U.S. Holder will recognize gain or loss on an
exchange of Preferred Shares for cash if the exchange:
(a) results in a “complete termination” of all
such U.S. Holder’s equity interest in the Company, or
(b) is “not essentially equivalent to a dividend”
with respect to the U.S. Holder. In applying the
Section 302 tests, a U.S. Holder must take into
account stock that such U.S. Holder constructively owns
under certain attribution rules, pursuant to which the
U.S. Holder will be treated as owning Preferred Shares
owned by certain family members (except that in the case of a
“complete termination” a U.S. Holder may waive,
under certain circumstances, attribution from family members)
and related entities and Preferred Shares that the
U.S. Holder has the right to acquire by exercise of an
option. An exchange of Preferred Shares for cash will generally
satisfy the “not essentially equivalent to a dividend”
test if it results in a “meaningful reduction” of the
U.S. Holder’s equity interest in the Company.
U.S. Holders are advised to consult their tax advisors
regarding the application of the rules of Section 302 in
their particular circumstances.
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We cannot predict whether any particular U.S. Holder will
be subject to sale or exchange treatment, on one hand, or
distribution treatment, on the other hand. Contemporaneous
dispositions or acquisitions of Preferred Shares (including
market sales and purchases) by a U.S. Holder or related
individuals or entities may be deemed to be part of a single
integrated transaction and may be taken into account in
determining whether the Section 302 tests have been
satisfied. Each U.S. Holder should be aware that because
proration may occur in the Offer, even if all the Preferred
Shares actually and constructively owned by a U.S. Holder
are tendered pursuant to the Offer, fewer than all of such
Preferred Shares may be purchased by us. Consequently, we cannot
assure you that a sufficient number of any particular
U.S. Holder’s Preferred Shares will be purchased to
ensure that this purchase will be treated as a sale or exchange,
rather than as a distribution, for United States federal
income tax purposes pursuant to the rules discussed herein.
Accordingly, a tendering U.S. Holder may choose to submit a
“conditional tender” under the procedures described in
Section 6 (“Conditional Tender of Preferred
Shares”), which allows the U.S. Holder to tender
Preferred Shares subject to the condition that a specified
minimum number of the U.S. Holder’s Preferred Shares
must be purchased by us if any such Preferred Shares so tendered
are purchased.
Sale or Exchange Treatment. If a
U.S. Holder is treated under the Section 302 tests as
recognizing gain or loss from the “sale or exchange”
of the Preferred Shares for cash, such gain or loss will be
equal to the difference, if any, between the amount of cash
received and such U.S. Holder’s tax basis in the
Preferred Shares exchanged therefor. Generally, a
U.S. Holder’s tax basis in the Preferred Shares will
be equal to the cost of the Preferred Shares to the
U.S. Holder. Any gain or loss will be capital gain or loss
and will be long-term capital gain or loss if the holding period
of the Preferred Shares exceeds one year as of the date of the
exchange. Long-term capital gain is currently subject to a
reduced rate of tax for non-corporate U.S. Holders
(including individuals). The deductibility of capital losses is
subject to limitations. A U.S. Holder must calculate gain
or loss separately for each block of Preferred Shares
(generally, Preferred Shares acquired at the same cost in a
single transaction). A U.S. Holder may be able to designate
which blocks of Preferred Shares it wishes to tender and the
order in which different blocks will be purchased in the event
that less than all of its Preferred Shares are tendered.
Distribution Treatment. If a U.S. Holder
is not treated under the Section 302 tests as recognizing
gain or loss from the “sale or exchange” of Preferred
Shares for cash, the entire amount of cash received by such
U.S. Holder pursuant to the Offer will be treated as a
distribution by us in respect of our stock. The distribution
will be treated as a dividend to the extent of the
Company’s current and accumulated earnings and profits
allocable to such Preferred Shares. Such a dividend would be
includible in income without reduction for the
U.S. Holder’s tax basis in the Preferred Shares
exchanged. Currently, dividends are taxable at a maximum rate of
15% for non-corporate U.S. Holders (including individuals)
if certain holding period and other requirements are met. To the
extent that amounts received pursuant to the Offer that are
treated as distributions exceed a U.S. Holder’s
allocable share of our current and accumulated earnings and
profits, the distribution will first be treated as a non-taxable
return of capital, causing a reduction in the tax basis of such
U.S. Holder’s Preferred Shares, and any amounts in
excess of the U.S. Holder’s tax basis will constitute
capital gain. Any remaining tax basis in the Preferred Shares
tendered will be transferred to any remaining shares held by
such U.S. Holder.
To the extent that cash received in exchange for Preferred
Shares is treated as a dividend to a corporate U.S. Holder,
(i) it generally will be eligible for a dividends-received
deduction (subject to certain requirements and limitations) and
(ii) it generally will be subject to the
“extraordinary dividend” provisions of the Code.
Corporate U.S. Holders should consult their tax advisors
concerning the availability of the dividends-received deduction
and the application of the “extraordinary dividend”
provisions of the Code in their particular circumstances.
Consequences
of the Offer to
Non-U.S.
Holders.
Sale or Exchange Treatment. Gain realized by a
non-U.S. Holder
on a sale of Preferred Shares for cash pursuant to the Offer
generally will not be subject to United States federal income
tax if the sale is treated as a “sale or exchange”
under the Section 302 tests described above under
“Consequences of the Offer to U.S. Holders —
Characterization of the Purchase — Distribution vs.
Sale Treatment” unless:
| • | the gain is effectively connected with the non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, the non-U.S. Holder maintains a United States permanent establishment to which such gain is attributable); |
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| • | the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met; or | |
| • | our Preferred Shares constitute “United States real property interests” by reason of our status as a United States real property holding corporation (“USRPHC”) for United States federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or the non-U.S. Holder’s holding period for our Preferred Shares. |
A
non-U.S. Holder
described in the first bullet point above will be required to
pay United States federal income tax on the net gain derived
from the disposition generally in the same manner as if such
non-U.S. Holder
were a U.S. Holder, and, if such
non-U.S. Holder
is a foreign corporation, an additional branch profits tax at a
30% rate (or a lower rate if so specified by an applicable
income tax treaty) may apply to any effectively connected
earnings and profits.
A
non-U.S. Holder
described in the second bullet point above will be subject to
United States federal income tax at a rate of 30% (or, if
applicable, a lower treaty rate) on the gain derived from the
disposition, which may be offset by certain U.S. source
capital losses, even though the
non-U.S. Holder
is not considered a resident of the United States.
With respect to the third bullet point above, we believe that we
are not currently a USRPHC. The determination of whether we are
a USRPHC depends on the fair market value of our United States
real property interests relative to the fair market value of our
other trade or business assets and our
non-U.S. real
property interests. In the event we are a USRPHC, as long as our
Preferred Shares are regularly traded on an established
securities market, the Preferred Shares will be treated as
United States real property interests only with respect to a
non-U.S. Holder
that actually or constructively held more than 5% of our
Preferred Shares at any time during the shorter of (i) the
five-year period ending on the date of the disposition or
(ii) the
non-U.S. Holder’s
holding period for such Preferred Shares. If gain on the
disposition of Preferred Shares were subject to taxation under
the third bullet point above, the
non-U.S. Holder
would be subject to regular United States federal income tax
with respect to such gain in generally the same manner as a
United States person.
Distribution Treatment. If a
non-U.S. Holder
is not treated under the Section 302 tests as recognizing
gain or loss on a “sale or exchange” of Preferred
Shares for cash, the entire amount of cash received by such
non-U.S. Holder
pursuant to the Offer (including any amount withheld, as
discussed below) will be treated as a distribution by us in
respect of our stock. The treatment for United States federal
income tax purposes of such distribution as a dividend, tax-free
return of capital, or gain from the sale or exchange of shares
will be determined in the manner described above under
“Consequences of the Offer to U.S. Holders —
Distribution Treatment.” Except as described in the
following paragraphs, to the extent that amounts received by the
non-U.S. Holder
are treated as dividends, such dividends will be subject to
United States federal withholding tax at a rate of 30% (or a
lower rate specified in an applicable income tax treaty). To
obtain a reduced rate of withholding under an income tax treaty,
a
non-U.S. Holder
must provide a properly executed IRS
Form W-8BEN
certifying, under penalties of perjury, that the
non-U.S. Holder
is a
non-U.S. person
and the dividends are subject to a reduced rate of withholding
under an applicable income tax treaty.
Non-U.S. Holders
are advised to consult their tax advisors regarding their
entitlement to, and the procedure for obtaining, benefits under
an applicable income tax treaty.
Amounts treated as dividends that are effectively connected with
the conduct of a trade or business by the
non-U.S. Holder
within the United States are not subject to United States
federal withholding tax but instead, unless an applicable tax
treaty provides otherwise, generally are subject to United
States federal income tax in the manner applicable to
U.S. Holders, as described above. To claim exemption from
United States federal withholding tax with respect to dividends
that are effectively connected with the conduct of a trade or
business by the
non-U.S. Holder
within the United States, the
non-U.S. Holder
must comply with applicable certification and disclosure
requirements by providing a properly executed IRS
Form W-8ECI
certifying, under penalties of perjury, that the
non-U.S. Holder
is a
non-U.S. person
and the dividends are effectively connected with the conduct of
a trade or business by the
non-U.S. Holder
within the United States and includible in that holder’s
gross income. In addition, a
non-U.S. Holder
that is a foreign corporation may be subject to a branch profits
tax at a 30% rate (or a lower rate if so specified by an
applicable income tax treaty) on dividends effectively connected
with the conduct of a trade or business within the United
States, subject to certain adjustments.
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Withholding for
Non-U.S. Holders. Because,
as described above, it is unclear whether the cash received by a
non-U.S. Holder
in connection with the Offer will be treated (i) as
proceeds of a sale or exchange of the Preferred Shares purchased
by us or (ii) as a distribution from us in respect of our
stock, the Company intends to treat such payment as a dividend
distribution for withholding purposes. Accordingly, payments to
non-U.S. Holders
will be subject to withholding at a rate of 30% of the gross
proceeds paid, unless the
non-U.S. Holder
establishes an entitlement to a reduced or zero rate of
withholding by timely completing, under penalties of perjury,
the applicable IRS
Form W-8.
In order to obtain a reduced or zero rate of withholding
pursuant to an applicable income tax treaty, a
non-U.S. Holder
must deliver to the Depositary, before the payment is made to
such shareholder, a properly completed and executed IRS
Form W-8BEN
(or other applicable IRS
Form W-8)
claiming such an exemption or reduction. In order to obtain an
exemption from withholding on the grounds that the gross
proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United
States, a
non-U.S. Holder
must deliver to the Depositary before the payment is made a
properly completed and executed IRS
Form W-8ECI.
To the extent
non-U.S. Holders
tender Preferred Shares held in a United States brokerage
account or otherwise through a United States broker, dealer,
commercial bank, trust company, or other nominee, such
non-U.S. Holders
should consult such United States broker or other nominee and
their own tax advisors to determine the particular withholding
procedures that will be applicable to them.
A
non-U.S. Holder
may be eligible to obtain a refund of all or a portion of any
United States federal tax withheld if such shareholder meets the
“complete termination” or “not essentially
equivalent to a dividend” tests described above under
“Consequences of the Offer to U.S. Holders —
Characterization of the Purchase — Sale or Exchange
vs. Distribution” or if the shareholder is entitled to a
reduced or zero rate of withholding pursuant to any applicable
income tax treaty and a higher rate was withheld.
Non-U.S. Holders
are urged to consult their tax advisors regarding the United
States federal income tax consequences of participation in the
Offer, including the application of United States federal income
tax withholding rules, eligibility for a reduction of or an
exemption from withholding tax, and the refund procedure, as
well as the applicability and effect of state, local, foreign
and other tax laws.
Information
Reporting and Backup Withholding.
Payments made to shareholders in the Offer may be reported to
the IRS. In addition, under the United States federal income tax
laws, backup withholding at the statutory rate (currently 28%)
may apply to the amount paid to certain shareholders (who are
not “exempt” recipients) pursuant to the Offer. To
prevent backup withholding, each non-corporate shareholder who
is a U.S. Holder and who does not otherwise establish an
exemption from backup withholding must notify the Depositary of
the shareholder’s taxpayer identification number (employer
identification number or social security number) and provide
certain other information by completing, under penalties of
perjury, the IRS
Form W-9
included in the Letter of Transmittal. Failure to timely provide
the correct taxpayer identification number on the IRS
Form W-9
may subject the shareholder to a $50 penalty imposed by the IRS.
Certain “exempt” recipients (including, among others,
all corporations and certain
non-U.S. Holders)
are not subject to these backup withholding requirements. For a
non-U.S. Holder
to qualify for such exemption, such
non-U.S. Holder
must submit a statement (generally, an IRS
Form W-8BEN
or other applicable
Form W-8),
signed under penalties of perjury, attesting to such
non-U.S. Holder’s
exempt status. A copy of the appropriate IRS
Form W-8
may be obtained from the Depositary or from the IRS website
(www.irs.gov). A domestic entity that is treated as a
disregarded entity for United States federal income tax purposes
and that has a foreign owner must use the appropriate IRS
Form W-8,
and not the IRS
Form W-9.
See Instruction 10 to the Letter of Transmittal.
Backup withholding is not an additional tax. Taxpayers may use
amounts withheld as a credit against their United States
federal income tax liability or may claim a refund of such
amounts if they timely provide certain required information to
the IRS.
Shareholders should consult their tax advisors regarding the
application of backup withholding to their particular
circumstances and the availability of, and procedure for
obtaining, an exemption from backup withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT
YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
YOU OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
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| 15. | Extension of the Offer; Termination; Amendment. |
We expressly reserve the right to extend the period of time the
Offer is open and delay acceptance for payment of, and payment
for, any Preferred Shares by giving oral or written notice of
such extension to the Depositary and making a public
announcement of such extension. During any such extension, all
Preferred Shares previously tendered and not properly withdrawn
will remain subject to the Offer and to the rights of a
tendering shareholder to withdraw such shareholder’s
Preferred Shares.
We also expressly reserve the right, in our sole discretion, not
to accept for payment and not pay for any Preferred Shares not
previously accepted for payment or paid for and subject to
applicable law, to postpone payment for Preferred Shares or
terminate the Offer upon the occurrence of any of the conditions
specified in Section 7 (“Conditions of the
Offer”) by giving oral or written notice of the termination
or postponement to the Depositary and making a public
announcement of the termination or postponement. Our reservation
of the right to delay payment for Preferred Shares that we have
accepted for payment is limited by Exchange Act
Rule 13e-4(f)(5),
which requires that we must pay the consideration offered or
return the Preferred Shares tendered promptly after termination
or withdrawal of the Offer.
Subject to compliance with applicable law, we further reserve
the right, in our reasonable discretion, and regardless of
whether any of the events set forth in Section 7
(“Conditions of the Offer”) have occurred or are
deemed by us to have occurred, to amend the Offer in any
respect, including, without limitation, by changing the per
Preferred Share purchase price range or by increasing or
decreasing the value of Preferred Shares sought in the Offer.
Amendments to the Offer may be made at any time and from time to
time by public announcement of the amendment. In the case of an
extension, the amendment shall be issued no later than
9:00 a.m., New York City Time, on the next business day
after the last previously scheduled or announced Expiration
Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to shareholders in a manner reasonably
designed to inform shareholders of the change. Without limiting
the manner in which we may choose to make a public announcement,
except as required by applicable law, we will have no obligation
to publish, advertise or otherwise communicate any public
announcement other than by issuing a press release to the Dow
Jones News Service or comparable service.
If we materially change the terms of the Offer or the
information concerning the Offer, or if we waive a material
condition of the Offer, we will extend the Offer to the extent
required by Exchange Act
Rule 13e-4(e)(3)
and
13e-4(f)(1).
This rule and related releases and interpretations of the SEC
provide that the minimum period during which an Offer must
remain open following material changes in the terms of the Offer
or information concerning the Offer (other than a change in
price or a change in percentage of securities sought) will
depend on the facts and circumstances, including the relative
materiality of the terms or information. If:
| • | we increase or decrease the price range to be paid for Preferred Shares or increase or decrease the value of Preferred Shares sought in the Offer (and thereby increase or decrease the number of Preferred Shares purchasable in the Offer), and, in the event of an increase in the value of Preferred Shares purchased in the Offer, the number of Preferred Shares accepted for payment in the Offer increases by more than 2% of the outstanding Preferred Shares, and | |
| • | the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of such an increase or decrease is first published, sent or given to shareholders in the manner specified in this Section 15, |
then in each case the Offer will be extended until the
expiration of the period of at least ten business days.
If we increase the value of Preferred Shares purchased in the
Offer such that the additional amount of Preferred Shares
accepted for payment in the Offer does not exceed 2% of the
outstanding Preferred Shares, this will not be deemed a material
change to the terms of the Offer and we will not be required to
amend or extend the Offer. See Section 1 (“Number of
Preferred Shares; Proration”).
| 16. | Fees and Expenses. |
We have retained BNY Mellon Shareowner Services to act as
Information Agent and Depositary in connection with the Offer.
The Information Agent may contact holders of Preferred Shares by
mail, telephone, telegraph and personal interviews and may
request brokers, dealers, commercial banks, trust companies and
other nominee shareholders to
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Table of Contents
forward materials relating to the Offer to beneficial owners.
The Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective
services, will be reimbursed by us for reasonable
out-of-pocket
expenses and will be indemnified against certain liabilities in
connection with the Offer.
We will not pay any fees or commissions to brokers, dealers,
commercial banks, trust companies or other nominees (other than
fees to the Information Agent as described above) for soliciting
tenders of Preferred Shares pursuant to the Offer. Shareholders
holding Preferred Shares through brokers, dealers, commercial
banks, trust companies or other nominees are urged to consult
the brokers, dealers, commercial banks, trust companies or other
nominees to determine whether transaction costs may apply if
shareholders tender Preferred Shares through the brokers,
dealers, commercial banks, trust companies or other nominees and
not directly to the Depositary. We will, however, upon request,
reimburse brokers, dealers, commercial banks, trust companies or
other nominees for customary mailing and handling expenses
incurred by them in forwarding this Offer to Purchase, the
Letter of Transmittal and related materials to the beneficial
owners of Preferred Shares held by them as a nominee or in a
fiduciary capacity. No broker, dealer, commercial bank, trust
company or other nominee has been authorized to act as our agent
or the agent of the Information Agent or the Depositary for
purposes of the Offer. We will pay or cause to be paid all stock
transfer taxes, if any, on our purchase of Preferred Shares
except as otherwise provided in Section 5 (“Purchase
of Preferred Shares and Payment of Purchase Price”) hereof
and Instruction 7 in the Letter of Transmittal.
| 17. | Miscellaneous. |
We are not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If we become
aware of any jurisdiction where the making of the Offer or the
acceptance of Preferred Shares pursuant to the Offer is not in
compliance with any applicable law, we will make a good faith
effort to comply with the applicable law. If, after a good faith
effort, we cannot comply with the applicable law, the Offer will
not be made to, nor will tenders be accepted from or on behalf
of, the holders of Preferred Shares residing in that
jurisdiction. In any jurisdiction where the securities,
“blue sky” or other laws require the Offer to be made
by a licensed broker or dealer, the Offer will be deemed to be
made on our behalf by one or more registered brokers or dealers
licensed under the laws of the jurisdiction.
Pursuant to Exchange Act
Rule 13e-4,
we have filed with the SEC the Tender Offer Statement on
Schedule TO, which contains additional information relating
to the Offer. The Schedule TO, including the exhibits and
any amendments thereto, may be examined, and copies may be
obtained, at the same places and in the same manner set forth in
Section 10 (“Certain Information Concerning Us”)
with respect to information concerning the Company.
You should rely only on the information contained in this
document or to which we have referred you. We have not
authorized anyone to provide you with information or to make any
representation on our behalf in connection with the Offer other
than those contained in this Offer to Purchase and the related
Letter of Transmittal. If given or made, you should not rely on
that information or representation as having been authorized by
us, any member of the Board of Directors, the Depositary or the
Information Agent.
OUR BOARD OF DIRECTORS, WITH EIGHT DIRECTORS IN FAVOR AND ONE
DIRECTOR (WHO WAS THE REMAINING DIRECTOR APPOINTED BY THE
HOLDERS OF THE PREFERRED SHARES) DISSENTING, HAS AUTHORIZED US
TO MAKE THE OFFER. HOWEVER, NEITHER WE NOR ANY MEMBER OF OUR
BOARD OF DIRECTORS OR BNY MELLON SHAREOWNER SERVICES, THE
INFORMATION AGENT AND THE DEPOSITARY FOR THE OFFER, MAKES ANY
RECOMMENDATION TO YOU AS TO WHETHER YOU SHOULD TENDER OR REFRAIN
FROM TENDERING YOUR PREFERRED SHARES OR AS TO THE PURCHASE
PRICE OR PURCHASE PRICES AT WHICH YOU MAY CHOOSE TO TENDER YOUR
PREFERRED SHARES. NEITHER WE NOR ANY MEMBER OF OUR BOARD OF
DIRECTORS, THE INFORMATION AGENT OR THE DEPOSITARY HAS
AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION WITH RESPECT TO
THE OFFER. YOU MUST MAKE YOUR OWN DECISION AS TO WHETHER TO
TENDER YOUR PREFERRED SHARES AND, IF SO, HOW MANY PREFERRED
SHARES TO TENDER AND THE PURCHASE PRICE OR PURCHASE PRICES
AT WHICH YOU WILL TENDER THEM. IN DOING SO, YOU SHOULD CONSULT
YOUR OWN FINANCIAL AND TAX ADVISORS, AND READ CAREFULLY AND
EVALUATE THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE
RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING
THE OFFER. SEE SECTION 2 (“PURPOSE OF THE OFFER;
CERTAIN EFFECTS OF THE OFFER”).
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Table of Contents
EMMIS
COMMUNICATIONS CORPORATION
December 1, 2011
The Letter of Transmittal and certificates for Preferred Shares,
and any other required documents should be sent or delivered by
each shareholder or the shareholder’s broker, dealer,
commercial bank, trust company or nominee to the Depositary at
one of its addresses set forth below. To confirm delivery of
Preferred Shares, shareholders are directed to contact the
Depositary. Shareholders submitting certificates representing
Preferred Shares to be tendered must deliver such certificates
together with the Letter of Transmittal and any other required
documents by mail or overnight courier. Facsimile copies of
Preferred Share certificates will not be accepted.
The Depositary for the Offer is:
BNY Mellon Shareowner Services
480 Washington Boulevard, 27th Floor
Jersey City, NJ 07310
|
By First Class Mail:
|
By Facsimile Transmission (for eligible institutions only): | By Overnight Courier or by Hand: | ||
|
BNY Mellon Shareowner Services Attn: Corporate Actions Dept.,
27th Floor
P.O. Box 3301 South Hackensack, NJ 07606 |
(201) 680-4626 To Confirm Facsimile Transmissions: (201) 680-4860 (For Confirmation Only) |
BNY Mellon Shareowner Services Attn: Corporate Actions Dept.,
27th Floor 480 Washington Boulevard Jersey City, NJ 07310 |
By Registered or Certified Mail:
BNY Mellon Shareowner Services
Attn: Corporate Actions Dept.,
27th Floor
P.O. Box 3301
South Hackensack, NJ 07606
Attn: Corporate Actions Dept.,
27th Floor
P.O. Box 3301
South Hackensack, NJ 07606
Any questions or requests for assistance may be directed to
the Information Agent at its telephone number and address set
forth on the following page. Requests for additional copies of
this Offer to Purchase, this Letter of Transmittal, the Notice
of Guaranteed Delivery or related documents may be directed to
the Information Agent at its telephone numbers or address set
forth on the following page. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
480 Washington Boulevard, 27th Floor
Jersey City, NJ 07310
Call Toll Free:
(866) 301-0524
Call Collect:
(201) 680-6579