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Thread: Could Investors actually save the company?

  1. #21
    winagain35 is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    James,

    Thanks, great information!!! Just like most here SIRIXM is running thru my mins 24/7 OCD style!! I was thinking good/bad on Convertable bonds today and wanted to make sure my thinking is correct. Brandon wrote an article a few months back arguing no difference between $600M or $6B in convertables, it was qucckly explained to Brandon that the lower stock price would require a much larger position to short to hedge the same $ amount. What I think was missed here and what Brandon was trying to get his arms around was NEW investor trying to hedge vs EXISTING investor hedging.

    GS has $143M in 2/09 $4.41 convertables and are fully hedged somewhere above $2 a share (or atleast above $1.5). If we pay those off in cash and do another convertable with another company YES GS will have to cover their short position which they have made a killing on (while they also have collected 2.5%m coupon) all this with NO RISK. BUT the new company issing a convertable will have to short possibly 10X the shares to hedge the same $143M. Would it not make sense for both GS & SIRIXM to simply change terms of FEB convert from 09 to 2011 and from $4.41 convert price to $.25 NO NEW SHORTING would happen as GS is ALREADY hedged on the $143M YES each penny the stock increases they will give back some of there gains on the short position but wont they be long 8:1 (8 long vs 1 short) when stock is above $.25 if the $143M was hedged at $2? 6:1 if hedged at $1.50?

    AM I MISSING SOMETHING HERE? Am I completly wrong on how this works?
    The question is - Assuming the bonds convert, is it worth roughly half a billion diluted shares to retire $143M of debt? Yes, it's better than the .14/share debt for equity swap from earlier in the week, but we only have 3.5 billion additional shares to work with here...

  2. #22
    LIBOR/TED SPREAD is offline
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    3.5B shares PLUS shares we have not used from the 4.5B authorized before meeting. Around 5B total shares in SIRIXM back pocket!

  3. #23
    LIBOR/TED SPREAD is offline
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    Jmm232,

    GREAT question, it would be nice if SIRIXM could start buying some of those 12/09 bonds for 19 cents on the $ buy I have no idea if the law allows this. This would allow SIRIXM to retire $100M of debt for $19M. Also, ANY inst investor looking at buying equity should instead buy the 2/19 bonds on mkt (80 cents on the $) then contact SIRIXM to convert to equity.

  4. #24
    winagain35 is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    Jmm232,

    GREAT question, it would be nice if SIRIXM could start buying some of those 12/09 bonds for 19 cents on the $ buy I have no idea if the law allows this. This would allow SIRIXM to retire $100M of debt for $19M. Also, ANY inst investor looking at buying equity should instead buy the 2/19 bonds on mkt (80 cents on the $) then contact SIRIXM to convert to equity.
    Now THAT's an idea! Though, you're not really doing the company any favors that way.
    Libor- I am curious about your math from an earlier post...
    --------------------------------------------------------------------------
    "Simply buy the Feb 09 bonds for 80 cents on the $1, 190% yield.
    or buy the 8/2013 for 19 cents on the $1, yield 71%."
    -----------------------------------------------
    I don't get how you arrive at 190% yield on the Feb 09s.. or the 71% on the 013s for that matter.

  5. #25
    john is offline
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    Newman, not to get picky but you must be very young. This economy is not a depression era economy. Secound it is not even the worst since the great depression. I say you must be young because you must not remember the 70s with Carter as President. Listen with as bad as it is now we still dont have unemployment nearing 10%, inflation at just over 11%, and intrest rates at over 20%, Lines a mile long to get fuel, ect., ect., I could go on and on about the Carter years. Sorry just had to clear that up. As a matter of fact, I believe one reason for this (how deep) recession is, if the media did not start saying we were in a recession a year and a quarter before we were actually in one, (to get Obama elected) people might have not gotton so scared and spent more. It is as they say, a self fullfilling profacy.

    P.S. The economy has a cycle look at history, we have a reccession once almost every 8 to 9 years.

  6. #26
    trippingthespeculatingpos is offline
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    Quote Originally Posted by john View Post
    Newman, not to get picky but you must be very young. This economy is not a depression era economy. Secound it is not even the worst since the great depression. I say you must be young because you must not remember the 70s with Carter as President. Listen with as bad as it is now we still dont have unemployment nearing 10%, inflation at just over 11%, and intrest rates at over 20%, Lines a mile long to get fuel, ect., ect., I could go on and on about the Carter years. Sorry just had to clear that up. As a matter of fact, I believe one reason for this (how deep) recession is, if the media did not start saying we were in a recession a year and a quarter before we were actually in one, (to get Obama elected) people might have not gotton so scared and spent more. It is as they say, a self fullfilling profacy.

    P.S. The economy has a cycle look at history, we have a reccession once almost every 8 to 9 years.


    my sentiments exactly

  7. #27
    LIBOR/TED SPREAD is offline
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    Win,

    I believe this website is using the discount & coupon along with annualizing

    Sirius
    http://www.investinginbonds.com/corp...riteria=sirius

    XM
    http://www.investinginbonds.com/corp...ch&criteria=xm

  8. #28
    Siriusowner is offline
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    Quote Originally Posted by LIBOR/TED SPREAD View Post
    Simply buy the Feb 09 bonds for 80 cents on the $1, 190% yield.
    or buy the 8/2013 for 19 cents on the $1, yield 71%.

    I am no expert on bonds but learning more then I ever thought I would (learned more about the fcc and mergers then I ever though or wanted to know too)

    We need some list of "pecking" order these debt holders have IF a BK would happen, it would seem obvious to me the debt holders lower on the list (and attached to XM assets ONLY) would have the most incentive to make a deal. anything from a simple refi to giving some of the farm away i.e. conv bonds $500M selling for 80 cents on the $ 10-15% coupon (we only collect $400M but pay them $500M at maturity) with a nice $1 strike to convert to equity as a carrot for more upside for those investors. Ofcourse I am just throwing some #'s out there but something like this is a win/win for all involved.

    SOMEOne MUST KNOW THE PECKING ORDER OF ALL THESE DEBT HOLDERS?

    Siriousowner put you 1335552 IQ to work and research the "pecking" order of the debt holders and how much each of these holders have at risk.
    LOL. I do know about bonds and I know that I would be nuts to buy a bond with 71% yield, let alone 190%. The yield is what tells you about the credit quality of the issuer... You are right, you are not a bond expert, bonds are bought and sold based on yield not on price !!!

    There are 9 types of risks commonly associated with buying and holding bonds: THE FIRST ONE IS THE RISK OF DEFAULT !!!... I know the other 8 but I am going to let you figure them out...

    I am going to give you a piece of advice though, study the Treasury bond curve...
    Last edited by Siriusowner; 12-27-2008 at 11:08 PM.

  9. #29
    TSavery is offline
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    Logistics

    The problem is logitics

    1. I have seen people disappointed with current management and the stock price wanting to get thousands of people together to "loan" the company money. Some want a small interest rate, some the market rate, and others have said that they would be willing to do it interest free. Therein is a major problem. Organizing a large group of people to come to a common strategy is a daunting task to say the least. Set aside the approvals that would be needed, the paperwork that would need to be drawn up, and the accounting (all of which have costs), and look at the shear numbers. Can you imaging the calls to customer service from an overzealous investor who loaned the company $500 to $1,000? People already act like because they own stock that they should get special treatment. What would happen with thousands upon thousands of them? Who is going to foot the bill to set up something that, in the end, may not have the level of participation required? Not only do you potentially lose other financing opportunities, but you would lose time and money as well.

    The problem here is organizing such a task in a way that does not cost the company a bunch of money and time. The idea seems great, but there is no indication of what types of participation would actually step up to the plate. To raise $900,000,000 at $1,000 each, there would need to be 900,000 investors as willing participants. If we assume 12% interest, that is a pretty penny going out the door each year. The short term hurdle will have been cleared, but cash flow would be impacted.

    In my opinion, the ONLY way this will come about is if someone steps up to the plate to take on the task of organizing shareholders in numbers great enough to prove viable to the company. To be frank, the company would not need to raise all $900,000,000. One third of that would provide a lot of wiggle room for Sirius XM given their revenue streams.

    Before anyone asks, I am not a person who would take on such a task. I simply already know that the numbers are not there. Even if all of the people that visit this site were to participate, the money raised would be minute compared to what is needed. SiriusBuzz has a bit over 1,000 registered forum members, and perhaps 3,000 who we can't even get to register!

    The annual meeting had an attendence of about 150 people! Frankly, the level of "concern" is only "skin deep" in most cases. When called to action, the size of the pool gets very small.

    I wrote about Autism, how many readers bought $10 pins that were for a good cause. A couple of dozen! And that was only $10!

    I don't want to discourage the discussion, but I do want to put in the reality that participation and organization are not likely to happen.

    Perhaps a solution is pre-buying satellite service. Buy a few years in advance, the company has some capital, and the idea is far more simple. If someone could organize such a campaign, and garner support of 1,000 people, I would be very impressed.
    Tyler Savery
    Satellite Standard Founder

  10. #30
    Siriusowner is offline
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    Quote Originally Posted by winagain35 View Post
    Now THAT's an idea! Though, you're not really doing the company any favors that way.
    Libor- I am curious about your math from an earlier post...
    --------------------------------------------------------------------------
    "Simply buy the Feb 09 bonds for 80 cents on the $1, 190% yield.
    or buy the 8/2013 for 19 cents on the $1, yield 71%."
    -----------------------------------------------
    I don't get how you arrive at 190% yield on the Feb 09s.. or the 71% on the 013s for that matter.
    Good question. I posted my previous post without thinking too much but how did he arrive to 71% yield and 190% yield ? and is it current yield, YTM, YTC or what ?

    I assume he tried to calculate the current yield ? which is calculated by dividing the annual interest from the bond by the amount paid for he bond.

    EDIT: Got it, I check the web site, it is the YTM, which for the Feb Bonds is a worthless figure because it is the compounded interest payed by the bond thru its entire life, which is almost over.
    Last edited by Siriusowner; 12-27-2008 at 11:59 PM.

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