Clarity On Sirius XM Reverse Split Issue
Now that the reverse split and other issues have been approved by shareholders, many have questions as to when such actions will take place. Many investors were so caught up on the surface issue of a reverse split that they did not consider the issue in it’s entirety.
the matter is that a reverse split may never happen. I am not saying that the company will not do a reverse split, but rather that the authorization allowed by the shareholders does not demand a reverse split. What shareholders approved was an authorization for a reverse split. The wording for the issue state:
“To approve an amendment to our certificate of incorporation to (i) effect a reverse stock split of our common stock by a ratio of not less than one-for-ten and not more than one-for-fifty at any time prior to December 2009, with the exact ratio to set at a whole number within this range to be determined by our Board Of Directors in its discretion, and (ii) reduce the number of authorized shares of our common stock as set forth in our proxy statement.”
In simple terms, the Board of Directors can initiate a reverse split at any time between now and the end of 2009. Popular thinking is that this issue is for the issue surrounding possible delisting from NASDAQ. The proxy did not specify the use of the reverse stock split, but indications from management are that this is what they wanted the authorization for. If this is the case, then the issue will be on the table until at least mid 2009. NASDAQ suspended delisting until January 20, 2009. At the time NASDAQ had done the initial extension, Sirius XM Radio had not received a delisting notification. This means that they would be in line to receive one on January 20th (If stock stays below $1.00 for thirty days). Even then, the company will get what is virtually an automatic 180 extension to come into compliance. It is possible that NASDAQ extend the delisting deadline deadline, as many companies are still out of compliance (over 200) due to the economic turmoil in the country and markets. Even without a second NASDAQ extension, the delisting issue can be pushed of until mid July at a minimum. If during all of this time the equity comes back into compliance, all of the clocks would reset.
Sector watchers who want to gauge when this may happen (if ever) will want to watch the NASDAQ listing issue closely.
Position – Long Sirius XM
Actually Tyler, the way that I read the NASDAQ listing notice, was that as of January 20th, ALL clocks are going to be reset unless you already recieved a notice. That means that January 20th would be considered SIRI’s first day with a stock price less than $1, and they would not get their notice until they have had their stock under $1 for 30 days. THEN they get the notice, and get the 180 days to come into compliance. THEN they can file for appeal and get another 180 days.
That means Jan. 20 gets pushed to Feb 20th, gets 180 days to August 20th, and appeals for another 180 days to get to Feb 20 2010 before they could actually be delisted.
Good info Newman, thanks!!
This puts a whole new perspective on the R/S, because that option expires before hand. Hmmm?
I agree 100% with Newman’s statement. This was also my understanding based on the NASDAQ notice. The clck wold start again on Jan 20th, so the earliest they would hear anything is Feb 20th. Isn’t that around the time we pay off those Feb bonds?
Tyler,
Good article. Sirius has some time to get things fixed. Its going to be july or august of 2009 before the delisting of the company becomes an issue. We know that they have around 990m dollars to pay off next year. If they get a deal done and refinance the debt then you have until about 2014 before any major debt comes into play again. The current market conditions are terrible but sirius is still adding subs and that means there is still growth.I thought the numbers from the 8k released looks really positive going forward. They have done alot of cost savings and have really started to get the wheels rolling in my opinion. 2009 is a big hurdle. If it can be overcome sirius will be fine and i believe will really thrive. As for the reverse split i dont think we should have to worry about that until the company nears delisting.
I really hope some analyst will start to comment on what sirius said today to get their opinions.
Won’t having a R/S over our heads keep the share price down. I know I haven’t bought any shares since I heard of the R/S possibility. It would be cheaper for me to buy shares after the split when the shares pull back than to buy shares now. I think we’re at .13 because the R/S is looming.
I am thinking of bringing my average down below a 1.00.
LETS SEE……… WE ARE .14 WE DOUBLE TOTAL SHARES THAT MEANS MY STOCK WILL BE WORTH .07 THEN WE DO A 1/50 REVERSE SPLIT EAQUALS 3.50$ A SHARE AND IT HAS TO GO TO 7.00$ FOR ME TO GET WERE i AM NOW? AND 57.00$ TO GET MY MONEY BACK.. YEA!!!!!!! WAY TO GO MEL KASIZZLE
its a complete fucking joke.I hope Mel gets hit by a truck
I drive a truck, when and where can I find him crossing a street?
Newman
You seem to be the level headed one of the posters. IMO the 100M decrease(loss) in 2008 EBITDA combined with the projected numbers for 2009. Balance sheet looks promising. Once the debt is taken care of (as long as it is favorable) The SP should rebound to a significantly higher number. What is your take on the meeting?
I’m amazed anyone still cares about any of this stuff.
Reverse splits (or splits of any kind) do nothing. At all. The entire concept is silly.
The problem here is the merger. It was a bad idea, everyone can now SEE it was a bad idea, and it is only getting worse.
Instead of Sirius collapsing under the weight of its bad business decisions, we now have both XM and Sirius having collapsed (XM’s worst decision was to merge with Sirius), we now have half the music channels to choose from (instead of the “more choice” we were promised) and a looming debt crisis on the horizon. Had they not merged, the companies could have faced down the debt crises individually.
After the merger, the problem is just too big and the company will clearly be forced to Chapter 11 unless financing can be found, which is highly unlikely.
At one point it really looked like the industry might make it. Unfortunately, Howard Stern destroyed it. Howard Stern had the good sense to sell his shares the moment he received them. He knew he had sucked Sirius dry from the outset. Now, this “asset” the company has invested hundreds of millions in will walk away five short years later with more money than any other person made out of it.
I don’t think I’ve ever seen an industry commit suicide like this one has, not in a while at least.