Journal Communications Buying Stake Of Super-Voting Stock From Grant Family

By: E&P Staff Milwaukee Journal Sentinel publisher Journal Communications said Thursday it has repurchased stock amounting to a 20.6% stake in super-voting class B shares from a corporation controlled by the founding Grant family.

Class B shares are not publicly traded, and have ten votes per share. They are convertible into class A shares on a one-to-one basis.

Journal Communications said it purchased 3,200,000 shares of class B common stock from Matex Inc. at $10 per share, for a total of $32.0 million. The company said the purchase price reflects a 7.7% discount to the ten-day volume weighted average class A common stock closing price beginning on August 9, 2007 and ending on August 22, 2007 and a 0.9% discount to the $10.09 closing price of class A shares on August 22, 2007.

Matex Inc. is a corporation controlled by members of the family of the Journal Communication's former chairman, Harry J. Grant.

Matex and the other Grant family members agreed to a one-year "lock-up" on sales of their remaining Journal shares, and the elimination of their existing right to nominate a second director if the Company's board were to increase to more than 11 directors, Journal Communications said.

The company was also "granted certain rights regarding the conversion of some or all of the class C shares" held by Matex and the other Grant family members, the Milwaukee-based newspaper, direct marketing, and broadcasting company said.

"We are pleased about this opportunity to buy a substantial block of shares in a single purchase," Journal Communications Chairman and CEO Steven J. Smith said in a statement. "The Grant family has advised us that this stock repurchase allows members of the family to diversify their portfolios while continuing to remain dedicated owners of Journal Communications."

After the repurchase, Matex owns 1,431,000 class B shares as well as 3,033,963 non-publicly traded class C shares, which carry two votes per share. Other members of the Grant family also own an additional 16,667 class B shares and 230,037 class C shares.

"This repurchase benefits all Journal shareholders, as the transaction will be accretive to earnings per share," Smith said. "Our healthy balance sheet and strong cash flows have enabled us to fund this transaction while preserving our significant financial flexibility to invest in and continue to grow our business."

Journal Communications said the repurchase was part of its ongoing share buyback program, which to date has repurchased 12,149,100 shares. The company is authorized to buy back a remaining 2,850,900 shares under the current program.