If they had that much cash on hand they wouldn't be looking for a "white knight"Originally Posted by SD-08
SIRIUS XM SATELLITE RADIO FORUM
If they had that much cash on hand they wouldn't be looking for a "white knight"
winagain35, I think that is a all or nothing deal. The point being MLB has 120 million they get no matter what why would they risk that unless Mel can show SIRIXM will be around for the next few years to give them the 120 million plus. Mel has to show at least that he has the rest of the 2009 financing in the bag even with using the 120 million first.
LIBOR/TED SPREAD, I think you have to go back and look at first quarter of 2007 cash burn for both SIRI and XMSR. I dont think the cash burn is that much. You have to remember they do have revenue coming in during that quarter that helps in paying some of those cost. It is the cash burn from the 2007 1st quarter and then 2nd quarter COH that you need to know first.
SD-08, because they may only have had tens or hundreds of thousands and not millions as you think. Those numbers are not in yet, there is also nothing to go from in prior years as to take rates on them, so at best it is a big guess.
Last edited by john; 02-13-2009 at 12:49 AM.
SIRIUSOWNER, no kidding,,,,but that doesn't explain not accounting for the money...............
JOHN,
Of course no one knows what the numbers are, but that doesn't mean we ignor all of it and not account for any of it in these hypothetical scenarios.
I'm not a big fan of b of b, so who knows, I always thought it was more attractive for XM subs. I gotta think that at least 1 million, only 5% of all subs, did it. That's $60 mil.....
Now the lifetime sub.......I can easily see 2 million subs doing it, that's almost $800 million!!!!!!!!!!!! Let's say you subtract 1/2 of that because everyone of them had 15 months left on their current sub (doubtfull).....
That's still $400 million.....That can't just be ignored!!!!!!!!!!!!!
SD-08, I hear you but I also made a FCF estimate of the 4th quarter of 2008that seemed to me to be right (200 million). I went from the last few years 4th quarters. I took the fact that both were almost FCF even in forth quarter 2005, both were close to or over 30 million in FCF positive in 4th quarter of 2006, and that SIRI had 80 million FCF positive in 4th quarter of 2007 and XMSR had none (but had major CAPEX forwarded in the 4th quarter that they will not have this quarter and if they did not have would have had about 60 million in FCF positive in the 4th quarter of 2007). So thinking even if they only added half of the subs they added from last year they should have at least have an additional 25 million added to the last 4th quarters FCF which for SIRI was 80 million. Add the 80 to the 25 and you have 105 million just from SIRI side of the business, That also did not take into account any savings from the merger. Did they have cost from the merger yes but I figured most of those were in the 3rd quarter and that by now in the 4th quarter the savings would at least offset the cost. Now from what I read from Miller Tabak analyst they will only have 60 million in FCF for the 4th quarter of 2008. Now while he maybe off I dont think he is that far off (140 million). So I just showed how even if you think something should be it just may not be. I mean doesn't it look like from what I just showed how they should at least have 160 million in FCF. I really could not see them getting less with more subscribers from last year, and the fact is the less new adds this quarter then they had last 4th quarter should actually help in FCF because of less subsidies paid out for each one. Think of it this way if they have a SAC of 78 dollars and they got 200,000 less this quarter then last 4th quarter then that is 78 X 200,000 = 15 million less in cost that gos right to the bottom line.
Last edited by john; 02-13-2009 at 01:44 AM.
There are two factors in the calculations that I'm not in agreement of:
1. The NFL and MLB payments are already held in escrow accounts (2009 for NFL and 2009 and 2010 for MLB). Does this not mean that payment for these obligations will come out of these escrow accounts, and not necessarily out of COH? I pay my home personal property taxes to an escrow account monthly and each year my personal property taxes are paid by this escrow account. Wouldn't the NFL and MLB payments be made from these accounts as well? I would not think that they would enter into an escrow agreement where the cash could not be used for the debt payment and must be held indefinitely.
2. AP is an ongoing expense for any business and is not payed from COH (or some other means of financing) unless the incoming revenue stream cannot cover the AP obligations for a said period. There's nothing to suggest that this is the case as we estimate revenues to be relatively stable. i.e. there is nothing outstanding that would require AP to be paid completely from COH this quarter versus any previous quarter.
Appying this logic, we have known COH of $360M at Q3 and an estimated $50M FCH in Q4 (I believe this is a conservative number, btw). Subtracting the $175M still leaves $235M in COH, not accounting for any revenue increases from B ob B, new internet subs, or new lifetime subs. It may be precariously low, but still a substantial amount of COH and it would appear to be more than any indentured requirements. And given the potential bump in SP could allow the potential to raise substantial cash (or eliminate existing convertible debt obligations on more favorable SP) looking forward.
From Sirius Xm's last 10Q, and there isn't anything else to go on...... $75M reserved and restricted cash.
Covenants and Restrictions
The 9 5 / 8 % Notes, Loral Credit Agreement, SIRIUS Term Loan, XM Term Loan, 13% Notes and XM Revolving Credit Facility require compliance with certain covenants that restrict our ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) merge or consolidate with another person, (vi) sell, assign, lease or otherwise dispose of all or substantially all of our assets, and (vii) make voluntary prepayments of certain debt, in each case subject to exceptions as provided in the applicable indenture or credit agreement. SIRIUS operates XM Holdings as an unrestricted subsidiary for purposes of compliance with the covenants contained in its debt instruments. The XM Term Loan and the XM Revolving Credit Facility also require XM to maintain a level of cash and cash equivalents of at least $75,000. If we fail to comply with these covenants, the 9 5 / 8 % Notes, SIRIUS Term Loan, XM Term Loan, 13% Notes, the Revolving Credit Facility and any loans outstanding under the Loral Credit Agreement, the SIRIUS Term Loan and the XM Term Loan could become immediately payable and the Loral Credit Agreement could be terminated.
At September 30, 2008, we were in compliance with all such covenants.
And this from XM's 2007 10K, regarding MLB and their escrow: (Thanks for the ref. earlier Homer)
Major League Baseball® — We have a multi-year agreement with Major League Baseball® (“MLB”) to broadcast MLB games live nationwide. In the first quarter of 2007, we made a payment in the amount of $60.0 million for the 2007 season and will pay $60.0 million per year thereafter through 2012. MLB has the option to extend the agreement for the 2013, 2014 and 2015 seasons at the same $60.0 million annual compensation rate. We will also make incentive payments to MLB for XM subscribers obtained through MLB and baseball club verifiable promotional programs. No stock or warrants were included in this agreement. The agreement requires us to deposit $120.0 million into escrow, which represents the amounts due for the 2011 and 2012 seasons, or furnish other credit support in such amount. In July 2006, we furnished a $120.0 million two-year surety bond to MLB as part of an amendment to the agreement with MLB that permitted us to provide various types of credit support in lieu of its $120.0 million escrow deposit requirement. If we are unable to renew this bond or obtain other credit support acceptable to MLB, there can be no assurance that we will not have to deposit funds to meet the escrow deposit requirement.
There Really is no reason why this $60M should not have been accrued throughout the year as an operating expense. Does anyone know where this expense might be accounted for and this discussion then becomes irrelevant??? Same for the Sirius NFL payment. These are contracted operating expenses. What they didn't know they had to pay them. I doubt it.
By the way pre merger the surety bond was replaced with a deposit of $120M in cash...... which basically came from their revolving credit facilities
Is that really only 75 thousand or is that 75 million? Is that a typo?
Demian,
Because it was cut and paste from the filing it is in Millions. So the $75,000 is $75Million..... I should of said that it was right from the report.... sorry about that.
I did open another thread, with more info, on the subject of accrual of expenses. I guess I better go their and put an explanation in that all cut paste is in Millions as found in the quarterly statements. Thanks.
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