As everyone well knows, the debt issues of this company are far outweighing the positive news regarding the rapidly improving metrics. This has kept the investors of this company hurting from the precipitous decline in the stock price. There have been some people that have been badmouthed by Sirius Longs (myself included - as a basher I mean) that have actually had some fairly decent insights into the company. I decided I would bring them to this thread for discussion:
Jim Cramer: "The common stock is nothing but a lottery ticket. The people that control the bonds control this company. Buy the Bonds, not the common."
Micheal Hartlieb: "Allow investors to buy bonds in the company to help pay off debt, rewarding long term investors two-fold"
What if these were actually feasible ideas?
Here is my opinion: Sirius XM is on the verge of becoming a cash cow, but they must get past the 2009 debt before they can go any further. The problem with this is the US is in one of the worst economic recessions/depressions of all time. The outlook on the street is bleak, Moody just downgraded Sirius, and the stock is priced for Bankruptcy.
What if Sirius came out and offered shareholders on record (includng institutions) the opportunity to purchase debt bonds? Rather than regulating their bond sales through the banks as is traditionally done, bring it straight to the investors. The issuance of Senior Secured bonds (secured by all assets of the combined company) in increments of $1000 each with an interest rate of 12-15% (they are Ca class bonds afterall) paid biannually that mature in 2018/2019 (10 year bonds) but are callable at any time with no penalty to the company other than the payable interst upto the next payment date.
This is a win/win proposition:
The deal is available only to current investors, rewarding those holding the stocks with a bond with a good yield.
If successful, the deal will take care of short term debt needs, lifting the price per share, which also rewards current investors.
The company gets the financing it needs, with terms that are not horrible, and can be paid off as soon as the company starts making money without penalty to the company.
I would definately be incouraged to pick up some of these bonds with those kind of terms. Sure, the company would have to sell 100 million bonds at 1 grand each to raise 1 billion dollars, but I think there are enough institutions and private investors who can afford to pick up at least a couple of these puppies to make the efforts worth their while.
What do you all think?