Debt Refinancing Of SIRI Could Offer Clues On Stern Deal
Sirius XM hit the wires today with several bits of news that sent the stock upward yet again. The company reported over 300,000 new subscribers, S&P upgraded the company, and it was announced that SIRI would be refinancing some 2013 debt out until 2018.
Lost amongst all of this news is a little piece of information that would require investors to read between the lines. Normally this could be a dangerous activity because it relies on assumptions rather than fact. However, the assumption I am making is grounded in reality.
When Howard Stern signed his original deal with Sirius it was a material event that required an SEC filing. When Stern got his first bonus it was also a material event. The same held true for his second bonus. In point of fact, pretty much anything related to a Stern deal has required disclosure from the company.
With the debt refinancing the company had to disclose material events such as several Attorney’s General taking action against the company, and other happenings. The status of Stern is material enough that not only would it require SEC filings, but anyone considering buying the debt would want to know as well. If Stern had already signed, it would need to be disclosed. If Stern had rejected any deal and was not going to sign it would also be a material event that a potential debt holder would want to know, thus it would be disclosed.
The likely situation is that the Stern deal was a big subject as Sirius XM considered making this refinancing move. If I was considering buying SIRI debt, I would want to know the status of the deal. The fact that the company is able to, and will be successful in refinancing this debt could offer a clue that the status of the Stern deal is on a positive course. While clearly a deal is not yet complete, there has to be enough confidence in how SIRI is handling the deal that those buying the debt are comfortable in doing so.
Sirius XM’s Mel Karmazin has stated that he would like to get the deal done and announced prior to the Q3 call. That call should be happening within the next three weeks. For investors this could be huge news. It would be one of the events that I stated earlier in the month that would allow the equity to continue upward momentum.
Sirius XM seems to be hitting on all cylinders right now, and there is clearly a path that should have the company continuing to move forward on great metrics and positive news. Over the next three weeks we can anticipate a Stern announcement, October auto sales, and Q3 numbers that will demonstrate beyond a shadow of a doubt that the company is moving in all of the right directions from a financial standpoint.
Some may be looking for a pullback, but in my opinion that wont happen right now. There is are to many positives on the table right now.
Position – Long Sirius XM Radio
Excellent observation Spencer! I think it is certainly reasonable to assume that this debt refinancing has to be a positive in Howard signing soon…not that I have had any doubts on this issue. The credit upgrades today by Moody’s and S & P is also huge that should give the institutions the confidence they need to start investing in a big way.
We should see SIRI hit $1.85 by next month, this stock was one of the best performing stocks of 2009 and will again be one of the best in 2010
You may be right.
The stock price held steady on todays decent operating news (it used to fall on good news). The company’s fundamentals, stock price, and investor sentiment are finally in alignment.
I’d prefer a little of the Greenspan era’s
‘irrational exuberance’………..ohhhh let’s say $6.85 instead !
or the Yahoo price target of 7.85
Just heard they increased the intital oferring to 700 million and interest rate is 7.65%
Satellite radio prices offering of $700 mln of 7.625% senior notes due 2018 : XM Satellite Radio, a subsidiary of SIRIUS XM Radio (Nasdaq: SIRI), today priced an offering of $700 million of Senior Notes due 2018. The notes will bear interest at an annual rate of 7.625%. The price to investors will be 100% of the principal amount of the notes. XM will receive gross proceeds of $700 mln from the sale of the notes before deducting the initial purchasers’ commissions and offering fees and expenses.
I Love that Spencer has finally gotten so bullish !
Spencer –
You make a great point in this article about how it gives hints to Howard Stern. This did not cross my mind.
Great article !
ooh Spencer . . last month I called your reporting “buttoned-down”
But now, now I’m seeing a little cleavage. In fact, I think I might even see a little . . .
Very nice connecting of the dots Maestro!
you don’t even see a ‘pullback’ to 1.38 or 9??
I’d prefer a little of the Greenspan era’s
‘irrational exuberance’………..ohhhh let’s say $6.85 instead !
Talked to my buddy last weekend, he called Sirius to renew his subscription, he usually does it annually (doesn’t auto-renew). But this time he told the SIRIUS employee that he only wanted to do 3 months, until he knew what Stern was doing. The SIRIUS employee wanted him to do 1 year but he held out.
The employee replied that “They’re not supposed to say anything, but Stern is PROBABLY staying.”
Take it for what it is. I hope he stays. I don’t listen to him that often, but i did catch the David Arquette interview, awesome.
MR. T. yesterday was hysterical
Clearly Howard is staying. You would need to be a long time listener to know. But suffice to say he would be more vocal of his “mistreatment” if he was leaving. That being said I don’t think it has anything at all to do with the refinancing.
Howard has nowhere else to go. He’s too old to get some podcast or something going. I think they are sitting like fat cats right now at SIRI…nobody bothers them…nice studio…they can run Howard TV with no issues i would assume. Why in the hell would he leave? Mel will not pay him as much, but Howard won’t work as much. I still think Howard would do well as a tele-commuter for a day a week or something…maybe Howard could do the show on Mondays from his home.
He has too many mouths to feed with Robin, Gary, Fred and the crew…he will stay and sign a 2-3 year contract…$70 million…shorter hours and maybe even do something special with the APPS or Howard TV or a website for Howard or something…
My guess is we know something in the next two weeks…prior to earnings call…go Mel…go Howard…GO SIRI!!
Agree..my guess is it is 3 days and more per day but less than the 4 day contract…Howard can say he won. Other possibility is a additional fee for Howard app…money going to Stern…50-50 at best on that. Either way Howard is staying.