Sorry, didn't mean to dodge the question... the numbers are based on numbers as of 6/30/08. The merger closed the first week of August, so no -- it would not include the new debt issues.
However, it is important to remember that those debt issues were used to retire old XM debt. It won't be a 100% swap -- but fairly close. The overall debt amount would have increased very slightly.
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This is a HUGE statement. For Tyler, Homer, myself, anyone else that is fearful of a hostile takeover: An increase in shares may also thwart a hostile takeover. The company can hold shares, and then issue them to dilute the hostile company's shares, lessening their influence and power over the company. That is something that I had not thought of.Originally Posted by GetItStraight
Homer, regardless of what numbers I am using, they are still only "have" 1.3 billion shares that are not issued. If they sold every single one of them for Friday's closing price of 0.26, that would only get them $338 million, which would barely touch their debt, and leave them with no shares available.Originally Posted by homer
If you want to completely wipe out 2009 debt by issuing shares (forget about the converts for now) you would have to issue almost 3.9 billion shares, diluting current shareholders by more than half, but also wiping out half of Sirius's debt.
Keysmark: At the end of the merger, the XM converts would automatically convert to Sirius shares, however XM shorts would NOT automatically convert. In order to get the deal done, Sirius had to loan these financial institutions shares of SIRIUS to short, because Sirius was on RegSho, and there were not a large number of shares to short.
In this instance, Sirius would be issuing the converts, but not loaning any shares. The institutions would have to find the shares themselves and short them if they wanted the arbitrage to play it safe. Also, because they would be paying off other convertible bonds, that takes out a portion of the dilution because once the convertible bond is recalled, those shares are effectively eliminated from the share count. (though many more are added due to the new convert)
Newman,
Thanks for taking the time to explain this to me. This is so much more sophisticated than I have had experience with.
Keysmark
Hey, I have never even taken a finance class in college... so don't feel bad.
I am self-learned, with the help of many on these forums like Tyler and Homer.
**which also means you should take what I say with a grain of salt**
Last edited by Newman; 11-09-2008 at 11:04 PM. Reason: disclaimer
Well, I'm finished for the evening.
Good luck to us all tomorrow.
Keysmark
Homer,
In your valuation for the licenses, wouldn't it be $2.6B if you are valuing each license at $1.3B??
I beleive with the way the SIRI Q2 call was done, the value of the XM license was already included in that, so he only had to adjust for the value of SIRI license.
Homer can clarify though, but thats the way I understand it.