Buyers Or Financing May Be Available For Circuit City
Credit is tight. No One is Lending. Financing right now is impossible. These are all comments or sentiments that many have felt or heard during the past several months. Everyone seems to be waiting for the bottom to be established. News today about embattled retailer Circuit City may show that there is a possible ray of light on the horizon.
It has been reported that Circuit City Stores Inc. is in talks with two interested parties that could buy the company or provide additional financing for it to stay in business. Circuit City filed for Chapter 11 bankruptcy protection this past November amidst slumping sales and a slumping economy.
Circuit City stated today that “highly motivated and interested parties” are expressing interest in providing additional financing to allow the company to sustain operations and move forward with a subsequent restructuring plan. It is said that the interested parties are nearly complete with their due diligence and moving into negotiations.
For satellite radio investors, news that such a large financing deal has the possibility of happening is positive. Sirius XM face about $180 million in debt due in February, with a total of nearly $1 Billion due this year. The company has been actively dealing with the debt load, and has indicated that it is their desire to get the 2009 debt financed by March 1, 2009.
While a Circuit City deal is not a sole indicator of what is happening, it does demonstrate that larger deals can still happen, even for embattled companies.
[Associated Press]
Position – Long Sirius XM, No Position Circuit City
Tyler, take a look at LVLT which refinanced their near term debt causing its stock to rise significantly. I think investors do not have confidence in Mel at this point. Really, can you blame them? He uses 45 million shares to pay down $6,000,000 in debt? If that does not speak of desperation then what does?
Tyler-We know that Mel has mentioned that SIRI is in talks with banks (JPM) about possible refi deals. With Sirius able to get the Feb. debt down to $180 million, I wonder how much is tied to the $130 million that Goldman Sachs holds. Of the $120 million that has come off the Feb. debt, zero has come off the $130 million Goldman owns. Just interesting, I think.
How do you know that none has came off the Goldamn debt? I don’t doubt it… just wondering how you know.
Mel will crush Goldman. Sit back and watch. Never count Mel out —
The company has been actively dealing with the debt load, and has indicated that it is their desire to get the 2009 debt financed by March 1, 2009.
Yes, and it is was my intention to earn a profit from investing in satellite radio.
Another favorite quote of mine:
“The merger has made us control our costs (and) we are dealing with
going to significant profitability in the years ahead,” Karmazin
said.”Is everything rosy? Of course not. But what’s going on is not
operationally problematic.”
I guess the key word is “operationally.” Because
even after they file for bankruptcy they will continue to operate. Good job Mel.
Tristan, see my comments below.
Im not going to sit here and blow sunshine up anyones rear and say what siriusXm is facing will be easy. Its not going to be easy. We all knew 2009 would be a hard year.
The reward will come after this year “IF” they can make it.
Take a look at the 3rd quarter report. The projections are 0.4 million free cash in 2010.
It pojects 0.6 million in 2011 and 1.0 billion in 2012.
That means they will do nearly 2 billion dollars in 3 years free cash flow.
Guys, If this company starts turning that kind of money and cash flow the people that bought this stock at its current levels will make some really good money.
I know its not a given. I understand the risk but alot of you guys cant seem to see past the wall we are up against right now. Mel isnt out to get you. He isnt trying to make you go broke and he isnt trying to kill the company. He has investments just like we do. He paid alot more for his shares than alot of people too.
He is doing a good job at cutting the fat out of the company and controlling cost. There are new products coming. I feel confident that he is doing all he can do to make this work.
Lastly, The real debt issue isnt Feb debt. SiriusXm has 360 million in cash on hand as of sept 30 of 2008. Thats more than enough to cover the Feb debt. The debt to be concerned with is the May debt. 350 millon due in may will be the real hurdle and problem to overcome.
Tristan, Mel did not mean what you suggest in your comments. Mel was saying that the low stock price did not interfere with the operation of the company. Mostly this is true, although a stronger share price would help out in the refinancing of the debt. Don’t despair about the share price; Mel will crush the shorts, you will see. Stay tuned. There won’t be a bankruptcy in all probability. I highly doubt that institutions would be buying in the numbers that they are buying if BK was around the corner. Take a look at Ameriprise’s position. Sorry, but they are not that stupid. Have patience even though admittedly it is rather difficult for all of us.
well I guess the DD on CC showed how bad things are at that company. Circuit City is going bye-bye