http://investor.sirius.com/secfiling...930413-08-6086
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"Item 3.02. Unregistered Sales of Equity Securities.
We issued an aggregate of 67,038,070 shares of our common stock, par value $0.001 per share, in exchange for $30,500,000 principal amount of our 2˝% Convertible Notes due 2009 (the “2˝% Notes”) beneficially owned by institutional holders.
We did not receive any cash proceeds as a result of the exchange of our common stock for the 2˝% Notes, which notes have been retired and cancelled. We executed these transactions to reduce our debt and interest cost, increase our equity, and improve our balance sheet. We may engage in additional exchanges in respect of our outstanding indebtedness if and as favorable opportunities arise.
The issuance of the shares of our common stock was made pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, contained in Section 3(a)(9) of such Act."
So that is about 30 million - how about the other 270 million?
I thought it was $300 million in bonds due in Feb.'09...
Why would they do this for such a small amount of money? I don't get it.
Homer. where are you?
I think the way to read this is that they exchanged debt for shares and reduced the Feb convertibles by 10% or 30M ?
http://investor.sirius.com/secfiling...930413-08-6086
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 20, 2008
SIRIUS XM RADIO INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-24710 52-1700207
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1221 Avenue of the Americas, 36 th Fl., New York, NY 10020
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 584-5100
_____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Item 3.02. Unregistered Sales of Equity Securities.
We issued an aggregate of 67,038,070 shares of our common stock, par value $0.001 per share, in exchange for $30,500,000 principal amount of our 2˝% Convertible Notes due 2009 (the “2˝% Notes”) beneficially owned by institutional holders.
We did not receive any cash proceeds as a result of the exchange of our common stock for the 2˝% Notes, which notes have been retired and cancelled. We executed these transactions to reduce our debt and interest cost, increase our equity, and improve our balance sheet. We may engage in additional exchanges in respect of our outstanding indebtedness if and as favorable opportunities arise.
The issuance of the shares of our common stock was made pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, contained in Section 3(a)(9) of such Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SIRIUS XM RADIO INC.
By: /s/ Patrick L. Donnelly
Patrick L. Donnelly
Executive Vice President, General
Counsel and Secretary
Dated: October 20, 2008
If I'm not mistaken this is the those shares that they never sold from the closing of the merger that Monday after approval. I remember them saying that they could utilize at a future date when they found appropriate.
Now wouldn't it have made much more sense to sell at that time for 1.50/share, then to sell at which looks like a price of about .45 cents ?
Why would they sell them now?
I may be wrong, but here is the link from July 25th:
http://investor.sirius.com/secfiling...950123-08-8560
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-152548
Proposed maximum
Proposed maximum
Amount to be
offering price per
aggregate offering
Amount of
Title of each class of securities to be registered registered share price registration fee
Common Stock, par value $0.001 per share 183,679,988 $ 1.50 $ 275,518,982 $ 10,827.94
78,719,995 N/A $ 166,099,119 (1) $ 6,527.70
(1) The proposed maximum aggregate offering price is calculated pursuant to Rule 457(c) based on the market value of Sirius common stock being registered, as established by the average of the high and low prices of Sirius common stock as reported on the NASDAQ Global Select Market on July 28, 2008, which was $2.11.
Prospectus Supplement
(To Prospectus dated July 25, 2008)
262,399,983 Shares
COMMON STOCK
This is an offering of an aggregate of 262,399,983 shares of common stock of Sirius Satellite Radio Inc., of which 183,679,988 shares are being offered on a fixed price basis. The shares of common stock being offered by this prospectus supplement are shares that we will loan to Morgan Stanley Capital Services, Inc., an affiliate of Morgan Stanley & Co. Incorporated, and UBS AG, London Branch, an affiliate of UBS Investment Bank, which affiliates we refer to as the “share borrowers.” These shares are referred to in this prospectus supplement as the “borrowed shares.” The share borrowers will sell a portion of the borrowed shares in a fixed-price offering expected to close concurrently with the Notes offering described below. After the fixed-price offering, the share borrowers will offer and sell the remaining borrowed shares in one or more registered public offerings at prevailing market or negotiated prices.
Per Share Total
Fixed Price to Public $ 1.50 $ 275,519,982
We will not receive any proceeds from the sale of the borrowed shares in this offering, but will receive a nominal loan fee from the share borrowers for the use of the borrowed shares. The share borrowers or their affiliates will receive all the proceeds from the sale of the borrowed shares. We have been advised by the underwriters for this offering that they, or their affiliates, intend to use the share loans and the short sales of the borrowed shares to facilitate transactions by which investors in XM Satellite Radio Inc.’s 7% Exchangeable Senior Subordinated Notes due 2014, which we refer to as the “Notes,” and that are being offered in a concurrent private offering, may hedge their investments through privately negotiated derivatives transactions. 183,679,988 of the borrowed shares will be initially offered at $1.50 per share, and the remaining borrowed shares will subsequently be sold at prevailing market prices at the time of sale or at negotiated prices. We have also been advised by the underwriters for this offering that over the same period that the share borrowers will sell the additional borrowed shares, the share borrowers or their affiliates expect to purchase at least an equal number of shares of our common stock on the open market and/or to enter into derivative transactions providing them with a synthetic long position with respect to an equal number of shares.
The completion of this offering of our common stock pursuant to this prospectus supplement and the accompanying prospectus is contingent upon the closing of the Notes offering. Both this offering and the Notes offering are conditioned upon the consummation of the merger as defined below. See “Share Lending Agreements; Concurrent Offering of Notes” and “Underwriting.”
Our common stock is listed on the Nasdaq Global Select Market under the symbol “SIRI.” On July 28, 2008, the last reported sale price of our common stock on the Nasdaq Global Select Market was $1.77 per share.
Investing in our common stock involves risks. See “Risk Factors” beginning on page S-14 of this prospectus supplement.
It wasn't as much a sale of stock as a swap. Basically 30.5 million dollars worth of bond holders gave back their bonds in exchange for 67 million shares.
Makes me think that they think the price of shares is going to go down before they go up. Hopefully they are going to pay the rest of the Feb debt off with cash... But if that were the case I would expect them to announce the cash payment first and then trade the shares after their value increased.
I don't know. This sounds a bit discouraging. But then again maybe something is up that hasn't been revealed yet.
2% dilution as a result of this.
Plus should we expect these shares to be shorted?
Come on credit markets... unfreeze, damn you!
The 2.5% Notes had $300 million outstanding, now its down to $270 million. These Notes previously had a conversion price of $4.41/share -- Sirius exchanged them instead at $0.455/share.
It is more dilution, but at this point - does it really matter?
The verbiage makes it look like Sirius is negotiating with individual holders of these Notes to exchange them at current prices -- rather than having to buy them back when the mature.
They will have some positive FCF this quarter, so they likely wouldn't need to do this for all $300 million, but I wouldn't be surprised to see them do it on an additional $170 million. It all depends on whether or not the holders of these Notes want to exchange them like this holder did.
BAD = Significant increase in dilution
GOOD = Reduction of maturing debt... less pressure to refinance it
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They reduced their carrying debt by $30 million -- and the need to refinance this amount next year, that is the only good thing; however they did it at the expense of the shareholders footing the bill, as they say.
But with the stock being under its book value and with so many billions of shares outstanding, it makes you wonder if that matters anymore?
I'm shocked the holder of these Notes did this, unless they believe the price is going up? Either that or they sold them already in the last couple days. They can't be selling them now, because the price is already under the price they converted at... I'd be shocked that a holder of this debt took the conversion deal -- only to sell them under the conversion price. They'd already be out $5 million, based on the current pps versus the conversion price.
I guess my point to my "significant" reference was more because I fully expect to see a few more of these filings, reducing another $100~$200 million more. That would be significant in the long term.
We'll see where they go... remember, Goldman Sachs is the big holder of these Notes. IIRC, they hold $120 million worth of these Notes.
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To try to figure out who desired to make this current share sale, we need to know if the buyer had the option to buy if and when it chose, or if the seller (Sirius XM) had the option to sell the current shares when it desired. If the buyer had the sole option to buy at a time of its choosing, then it would stand to reason that it thought the current price was a price at which it thought it was getting a good value. Or, if the purchase timing was at the sole discretion of the buyer, perhaps the buyer wanted to lock in its money because of its fear that Sirius XM would default on future payments. Or, perhaps Sirius XM wanted to show more money on hand to make it look less needy when it approached potential lenders for its future financing needs. We really don't know if any of the aforementioned scenarios are real, or if a combination of two or more of them are at play simulataneously. Perhaps with the proposed option to do a issue more shares in the future, with the proposed option of doing a reverse split, and with this current transaction, Sirius XM is trying to show it has options, all in preparation for seeking future financing, and all in an effort to not look desperate. All in all, this is very interesting, to say the least. By the way, did anyone notice that the headlines today say that the credit markets are loosening up? If true, this would add another layer to the puzzle, and perhaps Sirius XM is getting its ducks all in a row to secure financing?
my theory on todays 8k as posted on yahoo
What does this mean?
A. 30.5 million of the Feb 09 debt has been paid down in exchange for 67,038,070 shares of SIRI at near its current value of 0.38 a share.
Q. Why would these bondholders agree to convert at this point?
A. The share price of this newly merged company is at a historic low, since these particular bondholders have opted to convert, I am assuming that they feel the share price will increase from hear and they can profit from ownership of the stock.
Q. How does this bondholder know that the PPS will go up from here, and why would Sirius be so ready to allow a convert when its shares are priced below book value?
A. The share price is depressed because of uncertainty about the ability to refinance the debt due in 2009. HMMMM If I was a lending institution that just recieved 67 million shares in a company with share prices depressed on worries about debt, I would alleviate those worries and watch my 30 million investment double, triple or better, just by lending more money to Sirius XM. It is like legal inside information!!
Those are my 1/20th of a siri share (2 cents).
A pessimist would say that the bondholders wanted the shares to short and have already started.
But I'm an optimist.
Or... the bondholder may have been covering a short position. Remember the holders of convertible bonds typically short the common stock.
How do we know if this is dilutive or not? They had some shares left over from the merger financing deal - how do we know if these are those shares or not? If they are, it is not additional dilution....
I would assume that the newly issued shares were not part of the float. So now there would be 3.85 billion outstanding, with around 11 million non-issued leftover from the closing deal.
If the existing float is roughly 3.2 billion - the newly issued 67 million shares would mean the float would go to 3.26 - not 3.8 billion.