SBS Makes Moves With Its Stock To Address Foreign Ownership Allegations

Dealing With 'Foreign Ownership' Complaints

SPANISH BROADCASTING SYSTEM has filed an 8-K Form with THE SECURITIES AND EXCHANGE COMMISSION outlining the suspension of almost all the rights of their Series B shares. The Company was responding to allegations which it said if correct, which it did not concede, "the collective ownership of the outstanding Series B Preferred Shares by non-U.S. entities exceeds 63% of the outstanding Series B Preferred Shares as reflected therein, then non-U.S. entities would own well in excess of 25% of the equity of the Company in violation of Section 310(b)(4) of the Act."

The company wrote, "On NOVEMBER 28, 2017, SPANISH BROADCASTING SYSTEM, INC. (the 'Company') notified the holders of the Company’s 10 3/4% Series B Cumulative Exchangeable Redeemable Preferred Stock (the “Series B Preferred Shares) that the Company had suspended all of their rights, effective immediately, as holders of the Series B Preferred Shares, other than their right to transfer such shares to a citizen of the UNITED STATES due to the potential violation of Section 310 of the Communications Act of 1934, as amended (the 'Act'), and the Company’s Third Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) resulting from the current ownership of a majority of its outstanding Series B Preferred Shares by non-U.S. entities. The Company took this action in order to safeguard the Company’s most important assets, its FEDERAL COMMUNICATIONS COMMISSION ('FCC') broadcast licenses, which would otherwise potentially be at risk if the Company failed to take appropriate measures to remain in compliance with the Act."

SBS was responding to a complaint filed against the Company in the Court of Chancery for the State of DELAWARE by certain holders of the Series B Preferred Shares, "purporting to represent, in the aggregate, approximately 94.16% of the outstanding Series B Preferred Shares."

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