Shareholders Trigger Restrictions, Additional Directors After SBS Can't Cover Stock Buyback
October 18, 2013 at 4:55 AM (PT)
SPANISH BROADCASTING SYSTEM Series B Preferred Stock shareholders triggered a buyback TUESDAY (10/15) of $126.9 million worth of shares pursuant to the terms of the stock, but the company did not have enough cash to buy the total amount of stock and repurchased only $2.5 million worth, triggering in turn the right of the Series B shareholders to elect two directors to the board. The failure to buy back all of the shares also subjects SBS to more restrictive operating covenants, including a prohibition on SBS’s ability to incur any additional indebtedness and restrictions on what it can do overall, including selling the company, buy back securities, pay dividends, or invest.
The restrictions will be in place until all dividends in arrears are paid and all other failures, breaches or defaults that gave rise to the Voting Rights Triggering Event are cured or waived by a majority of the Series B shareholders. SBS notified the SEC of the event in a Form 8-K filing on THURSDAY (10/17).