Emmis Shareholders Go to Court to Slow Down Deal

RADIO ONLINE | Wednesday, July 21, 2010 | 2:58pm CT

Emmis shareholders, who are challenging President/CEO Jeff Smulyan's JS Acquisition in a bid to take the company private, were in court on Monday seeking a temporary restraining order to block the buyout, reports the Indianapolis Business Journal. The group wants the August 3 deadline for shareholders to accept a buyout offer delayed.

"We're not arguing the price," said Carl Stein, a lawyer at New York-based Wolf Popper LLP. "What we're saying is that people should have the right to make a fully informed decision on whether they like the price."

Stein said Emmis board members breached their fiduciary duty by not revealing key details to shareholders, such as company debt covenants due in August 2011 which are unlikely to be satisfied by a sale. Citing testimony from board members, Stein argued that the sale of the company is the only option to avoid bankruptcy since its more than $340 million in debt.

JS Acquisition is paying $2.40 for each share, or a 12% premium over the closing price of $2.14 on May 26. Emmis' board of director unanimously approved the transaction.