UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 22, 2020
MEDIACO HOLDING INC.
(Exact name of registrant as specified in its
charter)
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Indiana |
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001-39029 |
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84-2427771 |
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(State or Other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
ONE EMMIS PLAZA
40 MONUMENT CIRCLE
SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices and Zip Code)
(317) 266-0100
(Registrant’s telephone number,
including area code)
N/A
(Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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Class A common stock, $0.01 par value |
MDIA |
Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This Current Report on Form 8-K (this “Report”) includes or incorporates forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based upon management's assumptions, expectations, projections, intentions and beliefs about future events. In some cases, predictive, future-tense or forward-looking words such as "intend," "plan," "may," "will," "project," "estimate," "anticipate," "believe," "expect," "continue," "potential," "opportunity," "forecast," "should" and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Additional factors that could cause actual results to difference materially from the results anticipated in these forward-looking statements are contained in Emmis Communications Corporation’s (the “Company”) periodic reports filed with the U.S. Securities and Exchange Commission (the “SEC”) under the heading “Risk Factors” and other filings that the Company may make with the SEC. The Company cautions readers that the forward-looking statements included in this Report represent our estimates and assumptions only as of the date of this Report and are not intended to give any assurance as to future results. These forward-looking statements are not statements of historical fact and represent only our management's beliefs and expectations as of the date hereof, and involve risks and uncertainties that could cause actual results to differ materially and inversely from expectations expressed in or indicated by the forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. Accordingly, you should not unduly rely on any forward-looking statements.
The Company undertakes no obligation to update or revise any forward-looking statements contained in this Report, whether as a result of new information, future events, a change in our views or expectations or otherwise.
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Item 1.01 |
Entry into a Material Definitive Agreement. |
On April 22, 2020, MediaCo Holding Inc., an Indiana corporation (“MediaCo”), and Emmis Operating Company., an Indiana corporation (“Emmis”), entered into a certain Loan Proceeds Participation Agreement (the “LPPA”) pursuant to which (i) Emmis agreed to use certain of the proceeds of the loan Emmis received pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act (the “PPP Loan”) to pay certain wages of employees leased to MediaCo pursuant to that certain Employee Leasing Agreement, dated as of November 25, 2019, between Emmis and MediaCo (the “Leasing Agreement”), (ii) Emmis agreed to waive up to $1.5 million in reimbursement obligations of MediaCo to Emmis under the Leasing Agreement to the extent that the PPP Loan is forgiven, and (iii) MediaCo agreed to promptly pay Emmis an amount equal to thirty-one and fifty-sixth hundredths (31.56%) of the amount of the PPP Loan, if any, that Emmis is required to repay, up to the amount of the reimbursement obligations forgiven under (ii) above. Standard General L.P., on behalf of all of the funds for which it serves as an investment advisor, agreed to guaranty MediaCo’s obligations under the LPPA. The foregoing description does not purport to be a complete statement of the terms and conditions of the transaction or the rights of the parties to the LPPA, and is qualified in its entirety by reference to the text of the LPPA, a copy of which is attached hereto as Exhibit 10.1 and is incorporate herein by reference.
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Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
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The information provided with respect to the LPPA under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.02.
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Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
See the Exhibit Index below, which is incorporated by reference herein.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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MEDIACO HOLDING INC. |
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Date: April 27, 2020 |
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By: |
/s/ J. Scott Enright |
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J. Scott Enright, Executive Vice President, |
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General Counsel and Secretary |
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Exhibit 10.1
LOAN PROCEEDS PARTICIPATION AGREEMENT
This Loan Proceeds Participation Agreement (this “Agreement”) is entered into by and between Emmis Operating Company, an Indiana corporation (“Emmis”), and MediaCo Holding Inc., an Indiana corporation (“MediaCo”), effective as of April 22, 2020. Emmis and MediaCo shall sometimes be referred to individually as a “Party” and together as “Parties”.
WHEREAS, Emmis and MediaCo are parties to an Employee Leasing Agreement effective as of November 25, 2019 (the “Employee Lease”), whereby MediaCo leases certain employees of Emmis who work in MediaCo’s New York, NY radio stations, WBLS-FM and WQHT-FM (the “Leased Employees”); and
WHEREAS, pursuant to the Employee Lease, MediaCo reimburses Emmis for Emmis’ expenses related to the Lease Employees; and
WHEREAS, Emmis has applied for, and on April 13, 2020 secured, a Four Million Seven Hundred Fifty-Three Thousand Three Hundred Dollars ($4,753,300.00) loan with STAR Financial Bank (the “Loan”) under the Paycheck Protection Program, which is a part of the Coronavirus Aid, Relief and Economic Security Act and the provisions of the Act and the rules, regulations and guidance applicable to loans thereunder, as amended from time to time (collectively, the “PPP”);
WHEREAS, the purpose of the Loan is allow borrowers to use the Loan proceeds to cover certain permitted expenses of the PPP, including payroll expenses (collectively, the “Permitted Uses”); and
WHEREAS, to the extent that Emmis meets certain criteria under the PPP with respect to employment of its employees, including the Leased Employees, during the period ending as of June 8, 2020 (the “Measurement Period”), an amount equal to eight (8) weeks of Permitted Uses may be forgiven under the PPP; and
WHEREAS, Emmis’ application for the Loan included payroll expenses related to the Leased Employees, making One Million Five Hundred Thousand Dollars ($1,500,000) of the Loan attributable to expenses reimbursed by MediaCo under the Employee Lease (such amount, the “MediaCo Allocation”); and
WHEREAS, Emmis is willing to enter into this Agreement on the condition that Standard General L.P., a Delaware limited partnership, on behalf of all the funds for which it serves as an investment advisor (“SG”) guaranty the reimbursement obligations of MediaCo hereunder; and
WHEREAS, except to the extent that Emmis is required to repay any portion of the Loan, including any repayment in part, Emmis has agreed that MediaCo shall be given credit for, and not required to reimburse Emmis under the Employee Lease to the extent of, the MediaCo Allocation pursuant to the terms and conditions of this Agreement. Accordingly, the Parties agree as follows:
DB1/ 113583700.2
1.Use of Loan Proceeds. Emmis agrees that it will make commercially reasonable efforts to use the Loan for Permitted Uses and in a manner that maximizes the ability to have the Loan forgiven under the PPP.
2.Reduction of Reimbursement Obligation. Emmis agrees to waive MediaCo’s obligation to reimburse Emmis under the Employee Lease, on a payroll by payroll basis, in an amount equal to the amount by which Emmis during the Measurement Period applies the Loan proceeds to payroll costs for the Leased Employees in accordance with the loan forgiveness provisions of the PPP, and agrees to continue such waiver of the reimbursement amount under the Employee Lease after the expiration of the Measurement Period, on a payroll by payroll basis, until an amount equal to the full MediaCo Allocation has been waived.
3.Repayment of Loan Proceeds. To the extent that Emmis is required at any time for any reason to repay any portion of the Loan, MediaCo agrees that it will pay Emmis, on or before the date Emmis is required to make the repayment, Thirty-One and Fifty-Sixth Hundredths percent (31.56%) of the amount required to be repaid, including a one percent (1%) interest rate calculated consistent with the Promissory Note by Emmis in favor of STAR Financial Bank dated April 13, 2020; provided, that the amount that MediaCo is required to repay pursuant to this Section 3 shall not exceed the amount of the proceeds of the Loan that was used to pay expenses allocated to MediaCo.
4.Maintenance of Employees and Compensation. Emmis and MediaCo each agree to use commercially reasonable efforts to maintain the number of employees and wages paid in order to maximize the portion of the Loan that is eligible to be forgiven under the PPP.
5.Employee Lease. Except as explicitly set forth hereunder, the terms and conditions of the Employee Lease continue in full force and effect.
[signatures appear on following page]
DB1/ 113583700.2
IN WITNESS HEREOF, the Parties have caused this Agreement to be executed in their respective names by their duly authorized representatives as of the date first written above.
Emmis Operating Company
By: /s/ J. Scott Enright
Name: J. Scott Enright
Title: EVP/GC/Sec.
MediaCo Holding Inc.
By: /s/ J. Scott Enright
Name: J. Scott Enright
Title: EVP/GC/Sec.
Standard General L.P., on behalf of all of the funds for which it serves as investment advisor (collectively, “SG”), does hereby absolutely, unconditionally, and irrevocably guarantee to Emmis the full and complete performance and the full and prompt payment of MediaCo’s obligations pursuant to this Agreement. SG agrees that its liability pursuant to this guaranty shall be primary and not as a surety, and that in any right of action which shall accrue to Emmis hereunder Emmis may, at its option, proceed against SG without having commenced any action or having obtained any judgment against MediaCo. SG waives notice of default in the performance by MediaCo of its obligations pursuant to this Agreement. SG shall remain liable under this Guaranty unless specifically released in writing by Emmis. SG hereby agrees that no delay, waiver, or accommodation on the part of Emmis in the exercise of any right, power or privilege with respect to MediaCo’s obligations shall operate as a waiver of such right, power or privilege, or as a release or diminution in the obligation of SG hereunder. SG further agrees to be bound by the following provisions of the Contribution and Distribution Agreement, dated as of June 28, 2019, by and among MediaCo, SG Broadcasting LLC and Emmis Communications Corporation, in connection with any interpretation or enforcement of this guaranty: Section 13.2 (Notices) (with SG receiving notices at the same address and other information as Purchaser thereunder), Section 13.3 (Interpretation), Section 13.9 (Governing Law), Section 13.12 (Waiver of Jury Trial), and Section 13.13 (Jurisdiction; Service of Process).
Standard General L.P., on behalf of all the funds for which it serves as an investment advisor
By: /s/ Soohyung Kim
Name: Soohyung Kim
Title: Chief Executive Officer
DB1/ 113583700.2