His resignation, effectively immediately, allows the board to evaluate strategic options if Sillerman attempts to buy the company, New York-based CKX said today in a statement.
Sillerman’s pursuit of the company is separate from a bid by One Equity Partners, a person with knowledge of the situation said today. The person declined to be identified because the talks are private. One Equity Partners, JPMorgan Chase & Co.’s private-equity arm, was near an agreement to take CKX private, another person said in March.
Laura Kline, an outside spokeswoman for CKX, declined to comment beyond the statement.
CKX, which owns the rights to Elvis Presley’s name and image, confirmed March 29 that it was in discussions regarding a possible sale and said there was no assurance a deal would take place. Earlier that month Sillerman, the company’s biggest shareholder, said he was “extremely frustrated” with the stock price. He previously tried to take CKX private in 2007, dropping the bid in 2008.
CKX rose 19 cents, or 3.4 percent, to $5.74 at 11:35 a.m. New York time in Nasdaq Stock Market trading, giving it a market value of about $534 million. The shares had risen as high as $6.30 on April 20 following reports of One Equity’s offer. The stock reached an almost one-year low of $3.94 in February.
Sillerman, who had been CEO since 2005, took out personal loans, backed by his CKX shares, that may default if the stock falls, according to regulatory filings.
“It’s important to me to make sure that I maintain control of my own life and my own finances,” Sillerman said on a March 16 conference call.
Sillerman owns 19.2 million CKX shares, or 21 percent of the company’s stock, according to an April regulatory filing. He pledged about 15.6 million of those shares as collateral against a $50 million personal loan from Deutsche Bank AG, according to filings. A closing price below $3 on any day when the August 2011 loan is outstanding, or below $4 after April 26, may trigger default, the filing shows.
Michael G. Ferrel, a former director and president of the company, will serve as acting CEO, the company said today. Edward Bleier, a board member since 2005, was appointed chairman. CKX plans to report first-quarter results May 10.
CKX said Sillerman, 62, will continue as a consultant for the company. His contract was set to expire in February 2011, according to a regulatory filing on April 30.
Sillerman had been CEO since 2005, when CKX was formed by Sports Enterprises’ acquisitions of Simon Fuller’s 19 Entertainment. Fuller created the “Idol” concept and imported it from the U.K.