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Thread: Full WSJ Article

  1. #1
    TheAbbevilleKid is offline
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    Full WSJ Article

    Satellite mogul Charles Ergen made an unsolicited offer late last year to take control of Sirius XM Radio Inc., and was rebuffed, according to people familiar with the situation.

    Mr. Ergen proposed for one of his satellite companies -- EchoStar Corp. or Dish Network Corp. -- to inject enough capital into Sirius for it to meet its debt obligations and avoid a bankruptcy filing, these people said. Despite the rejection, Mr. Ergen has recently reiterated his interest in taking control of Sirius.

    Mr. Ergen isn't seeking to force Sirius into bankruptcy proceedings in order to acquire its assets more cheaply, according to a person familiar with his strategy. He believes that satellite radio would complement his television operation. Both are subscriber-based programming businesses that rely on similar technology.

    A spokesman for EchoStar declined to comment.

    Even if Mr. Ergen succeeds in acquiring control of Sirius, however, it is far from certain that federal regulators, whose approval would be required, would welcome the union of satellite television and radio. A deal would likely face close scrutiny and a lengthy review.

    Mr. Ergen's overture suggests that he has been planning his run at the company for some time. EchoStar began accumulating Sirius debt several months ago, according to people familiar with the situation.

    It was only last week, however, that EchoStar acquired control of a piece of Sirius's debt that could determine the company's fate. The debt in question is a $175 million tranche that matures Feb. 17.

    Sirius doesn't have enough cash to repay the bonds, and had been in negotiations with the hedge fund that previously held the notes to exchange them for a combination of more senior debt and equity. Before Sirius could reach a deal with the hedge fund, however, EchoStar stepped in and acquired the debt, giving Mr. Ergen more leverage.

    Sirius's predicament shows how the credit crisis has left many companies vulnerable. After Sirius's merger with rival satellite-radio operator XM was approved in late July, it began planning to refinance its debt. Yet within weeks of the deal's close the financial crisis began to envelop Wall Street, making it all but impossible for companies to tap the credit markets.

    Mr. Ergen's move has put Sirius Chief Executive Mel Karmazin in a corner. In discussions with investors last week, Mr. Karmazin said that unless he could raise $175 million, he would be faced with one of two options: having Sirius file for bankruptcy or cutting a deal with Mr. Ergen. The bankruptcy option probably would be the least attractive for shareholders.

    A bankruptcy filing would leave Sirius in the hands of its banks and wipe out its equity holders, including Mr. Karmazin, who recently invested millions of dollars in the company. It would also be difficult to justify to other shareholders, given that Mr. Ergen has offered an alternative.

    A Sirius spokesman didn't respond to a request for comment.

    Sirius has a total debt load of about $3.25 billion, $600 million of which is bank debt that would have to be redeemed immediately in the case of a change of control, under terms of the company's agreement with its banks.

    On Friday, Sirius shares fell 4 cents, or 21%, to 13 cents in 4 p.m. New York Stock Exchange composite trading. The company's market value is $456 million

    Comments anyone?
    The Abbeville Kid
    Last edited by TheAbbevilleKid; 02-09-2009 at 02:16 AM. Reason: spelling

  2. #2
    dread is offline
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    Thanks for posting the full article!!!

    If Mel was offered say like 4/5 a share last year, and declined the offer. I am going to shit the bed!!!

    Eventually we will find out the truth, if Ergen is a knight in shining armor, we need a check mate here for the end game.

    I swear!! This stock is worse than high school, with all the rumors swirling around it. And I hated high school, except for a few great teachers I had.

    Have a good night everyone!! I am out. I think? lol

  3. #3
    James is offline
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    It's a hit piece. Sirius does have the cash to pay the February debt. Paying with cash on hand is not an ideal situation and they are trying to avoid using it for that purpose.
    Last edited by James; 02-09-2009 at 02:38 AM.

  4. #4
    Bulldog17 is offline
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    Unbelieveable...

    James - You're right - there's an obvious agenda within the financial news mediums and are reporting upon speculation as opposed to fact: pazzo from Yahoo message board just posted the wsj's disclaimer below...

    Wall Street Journal - Feb 9
    Mon Feb 9, 2009 12:57am EST Email | Print | Share| Reprints | Single Page[-] Text [+]
    Feb 9 (Reuters) - The following were the top stories in The Wall Street Journal on Monday. Reuters has not verified these stories and does not vouch for their accuracy.

    * General Motors Corp (GM.N) is in talks to take back large portions of Delphi Corp (DPHIQ.PK), the parts supplier spun off by the auto maker a decade ago. The move is part of a strategy to qualify for additional government loans.

    * Sirius XM Radio Inc (SIRI.O) received, and rebuffed, an offer late last year by satellite mogul Charles Ergen to take control of the cash-strapped company. Ergen proposed for one of his satellite companies, EchoStar Corp (SATS.O) or Dish Network Corp (DISK.O), to inject enough capital into Sirius for it to meet its debt obligations and avoid a bankruptcy filing.

  5. #5
    sxminvestor is offline
    There must be something we don't know about Sirius cash on hand because there has been an assumption that the Feb convertibles would not be an issue at this present level of 175 million.

    5 days before debt is due, should be an interesting week.

  6. #6
    m4svt is offline
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    wow. i've never owned a stock with more problems than siri. it seems we don't ever get a break.

  7. #7
    Mario is offline
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    Sirius is like a nightmare that you can never wake up from.

  8. #8
    cos1000 is offline
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    Thanks for posting the article. It would appear that the original article was filled with speculation and that this report, especially quoting Mel in discussions with Investors is taken out of context and if true, is just part of tough negotiations to take more shares for debt. In addition the Hedge Fund does not own a majority of the $175M due, GS did. GS owned $123M as of their last SEC filing, 11/14/08. There hasn't been any news that after holding these notes since Feb 2004, that they would be willing to sell them now when they are at a premium.

  9. #9
    john is offline
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    cos1000, I believe Mel made that statement to get the dilution vote.

  10. #10
    cos1000 is offline
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    John, you would think the WSJ author would be able to state that though. If what your saying is true, and I don't doubt you, it is just more evidence to support the negative spin on this whole thing.

  11. Ad Fairy Senior Member
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