the article successfully uses lawyer talk that is put in as a safety net to paint things as worse than they really are, typical way they always attack siri, same way they created that bk scare, its how they keep it down. Brilliantly evil.
I'm not sure if anyone posted the NY Times article that really analyzes this deal, but here is the link:
http://dealbook.blogs.nytimes.com/20...s-last-chance/
Tripp, if Sirius terminates the second part, the first part can be called immediately by the lender (Malone). If not, then the expiration is 2012 for the first half.
o okay well even more reason for sirius to go through with the deal, i like the deal anyway. any1 giving a better offer would obviously have to pick up the tab for the malone deal, if there was to be any other offer's, i like the idea of teaming with malone anyway.
IMHO, the verbiage of the 8-K had everything to do with Delaware law, which the NYTimes blog mentioned was possible.
Why do I think this? Because during the merger of Sirius and XM, there was similiar verbiage for a "superior" offer for XM put in the merger agreement... which, IMHO was obviously put in there because of Delaware law. The clause allowed for a superior offer to come in, leaving XM with the ability to back out of the merger.
XM's lawyers and BOD were always overly cautious... and IMO, this is exactly what we're seeing here. They're making sure people like Hartleib can't come in and **** it all up because he has such disdain for this management. They're making sure everything is in order.
I think Karmazin and the BOD are just happy to get what they got in this economy. This Malone thing is a done deal, IMO.
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Homer and co:
I am not surprised about the terms of the deal based on the economy, but I don't like them. Basically, Sirius got their loans EXTENDED (not even paid off) for a much higher interest rate. The only thing Sirius gets out of this deal (that they don't have to pay back) is $100 million, and in exchange, they gave up 2 board seats and 40% of the company. After 3 years, Malone could turn around and exchange his perferred for common and buy up a controlling interest in the company and shareholders would end up getting screwed. He could have his way with the company, and approve anything he wanted.
Lets say that the bank debt due in May gets extended. This would start the 2nd part of this deal rolling. Does Sirius have to take the offer immediately? Can Sirius fish for another investor (bank, etc) for a loan and then turn around and pay off Malone and get the company back? They would still need to refinance approximately 1 billion, depending on May debt... 350 million in May, 301 Million to Malone, and 277 million in december in order to get out of this deal. Could it happen?
Just got off the phone with IR. Paul Blalock said this line:prevents any shopping or "fishing" for any other bank lenders. The only way we could back out of the deal is if an outside party came to us and presented a Superior Proposal.Pursuant to the Investment Agreement, we have agreed to various covenants and agreements, including not to solicit or encourage alternative transactions or, subject to certain exceptions, to enter into discussions concerning, provide confidential information in connection with, or approve or recommend, any alternative transaction until April 15, 2009.
Seems to me the dilution is set, unless Ergen comes back around and makes a better offer. Disappointing...
I sure wish we could be privy to the agenda Mel has regarding this deal. It would be nice to here some reassuring news that he is going to take care of this. Everything seems to point that he is grasping at straws to save this company, so I hope that he actually has a plan to make this work for the better.
I still don't see how this is as bad as most people think? Malone will make out well with the first part of the loan. Sirius has more time to get the right loans/terms until April. Sirius terminates the second part of the loan, pays its termination/premium fee's (no share's issued to Malone). Everyone walks away a winner. Malone makes great money on the short term and stands to make a whole lot more if Sirius can't refinance. Sirius gets Liberty inline with the company, an immediate cash influx that was needed for Feb debt, and (although bad terms) has the ability to survive through 2009's debt if nothing can get done.
Obviously Mel knows the 4Q results and probably has a great idea of how 1Q is shaping up. This is EXACTLY why the loan is a two part deal. Sirius has good quarters, refinaces, thanks/pays Malone for the Feb debt and we all sing praises to Mel.
HD you failed to add the next lines:Originally Posted by HD303
"If, prior to April 15, 2009, we receive an alternative proposal that our Board of Directors concludes in good faith is a Superior Proposal (as defined below), our Board of Directors may terminate the Investment Agreement in order to transact the Superior Proposal. After April 15, 2009, we may terminate the Investment Agreement if our Board of Directors determines it is in our best interests to do so. In either of those events, we will pay the Purchaser a termination fee of $7 million."
There are still ways around this. Can't solicite their debt but what about on going negotiations?
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