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Thread: What are the chances we can AVOID a R/S??

  1. #1
    Paratrooper_Rick is offline
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    Cool What are the chances we can AVOID a R/S??

    I see the R/S touched on in several of the various threads ongoing on the board... The question I pose to you more senior/researched SIRI investors is this -

    What is the likelihood we can AVOID R/S? In turn - lets consider the opposite - what are the chances we HAVE TO DO A R/S??

    I think I'm sensing enough interest among the general / junior posters in here to start a dedicated thread to this topic - forgive me if I'm stepping to far forward by starting the thread......

    Last thing - effects of R/S on shorts - I think several of us would like a good explanation we can mull over this weekend....

    Thanks

  2. #2
    Wirestripper is offline
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    I don'tsee much chance of avoiding a RS.

    The authorization expires at end of year, and the float is huge.

    NASD is not going to extend a grace period for de-listing indefinately.

    The only way they avoid it is share buybacks and even with synergies, they still have to invest some of that profit (assuming they make it) into things they have been avoiding like advertising and other promotions and a sat launch.. Liberty will help with that effort.

    I think the only question will be the ratio, and we won't know that for awhile yet. Right now it looks like 20 to 25 to 1. We will have to play this by ear until later this year and we have a better idea of the SP.

    IMHO
    Last edited by Wirestripper; 03-07-2009 at 04:51 PM.

  3. #3
    Paratrooper_Rick is offline
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    Buyback - R/S

    Understood we have a HUGE float - but thinking about whatever momentum we may be gaining - wouldn't it make sense to pull a buyback BEFORE the SP moves much higher - assuming we have hit bottom - (remembering the .06 we were at not long ago).

    It seems to me - there's been alot of speculation about the COH and what the hell they are holding onto it for - given they just gave up 40% of the company to Malone....

    What if MEL decided to delay releasing Q4 til the 17 March CC in order to set SIRI up for a buyback? - once the SP has leveled out - hopefully by then we'll be in the .20 + range - and perhaps after Q4 numbers we drop slightly - say back down to where we are - then buyback.

    Major obstacles for 09 would be dealt with - the R/S could perhaps be avoided - Q4 would be out and the anxiety done increasing confidence among investors.

    either way - I'd think that the wisest time to do the buyback would be soon - rather than later.

  4. #4
    Newman is offline
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    Unfortunately, I think an RS is needed. BUT NOT YET.

    With a float of 4 billion shares and a stock price in the teens, the circumstances lend themselves to manipulation.

    They need to wait until they have a consistant string of good news. I could see an RS coming around September if the economy turns around, banks start lending, and people start buying cars. If all of these are not happening yet, a RS will be a disaster for current shareholders.

    As far as for HAVING to do a RS, there will be another shareholder meeting this year. They could vote to extend the deadline for the RS. The earliest possible time when SIRI could get delisted currently is around March or May of 2010. (Cant remember exactly). Also, NASDAQ has mentioned that it is considering taking out the minimum $1 stock price requirment and instead sticking with a minimum market cap requirement. I believe the current market cap requirement is $50 million, meaning Sirius stock would have to drop to 0.014 cent per share before they hit that number.

    I do not see a share buy back happening in the next 3 years, so that will not prevent a RS.

    Just my opinion.

  5. #5
    Newman is offline
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    Rick: The company has billions in debt, JUST avoided BK TWICE, and now you think they can afford to spend money on a share buyback when the economy is in the crapper? It would be VERY risky.

    On the other hand, they could do a massive buy back at these levels with relatively little money. Investing $1 million into a share buyback could eliminate about 7 million shares. 10 million = 70 million shares, and 100 million = 700 million shares. My concerns would be if any of the bonds have covenants which restrict the company from buying back shares before the debt is paid off. I believe homer mentioned that this was indeed a possibility.

  6. #6
    Paratrooper_Rick is offline
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    R/S - Buyback?

    My exact point is - if they can afford - based on cash on hand - and the current SP - to get even a small buyback done now to conserve COH later - MEL may have that on the table.

    Most of us didn't think we'd even be at THIS point - debt dealt with - no B/K on the near horizon - Merger done -

    MEL's pretty savvy. What tipped me off to this idea was another poster's hint about "the mind of a billionaire.." - I can't imagine they'd want to hold off too long to do a buyback if they've secured a platform to do it sooner than later... and there still is a big mystery hovering around the COH - and what is actually is sitting at. Then you throw in Malone's vested interest and I'm not sure it isn't a plausible idea at this stage....

    As with all our speculation - it is exactly that - and history shows us - anything can happen.

    If you look long term - if they COULD manage it - I can't see why they'd avoid spending less now per share on the BB.

    Thanks for your perspective - I'm not deluded - just throwing it out there (actually I'm likely a little deluded - I did just buy into SIRI)

  7. #7
    Newman is offline
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    I think we are all a bit deluded. After thinking about it, I think this would be a great thing right now with the stock where it is. For $50 million, they could take 350 million shares out of the float. That is a MASSIVE number of shares for a small amount of money to this company. The main issue would be if they even CAN buy back shares because of the covenants in their debt agreements. I just don't think it is possible at this point.

  8. #8
    OldDruid is offline
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    Quote Originally Posted by Newman View Post
    I think we are all a bit deluded. After thinking about it, I think this would be a great thing right now with the stock where it is. For $50 million, they could take 350 million shares out of the float. That is a MASSIVE number of shares for a small amount of money to this company. The main issue would be if they even CAN buy back shares because of the covenants in their debt agreements. I just don't think it is possible at this point.
    Others have stated that the float should be reduced by about 66%. Would a 350 million share reduction even have a lasting effect? If they chose to spend 200 million for a 1.4 billion share reduction, is it possible that the money could be better spent launching new equipment, advertising and developing market share, thus bring in new and sustaining revenue streams?

  9. #9
    mogami is offline
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    R/S

    Hi, Paying off debt comes before buying back shares. And I think Newman is correct about their not being allowed to buy back shares.
    If Liberty had 40% of float and Sirius bought back shares they would increase Liberties percentage. They also likely cannot issue the 1.2 billion shares they are still authorized because that would lower Liberties percentage. (unless they did it before Liberty converted)

    I expect the R/S when executed to be the max possible 1-50. The new float will be around 136,000,000 with Liberty holding 54,400,000 of them.

  10. #10
    Paratrooper_Rick is offline
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    R/S - Buyback?

    I think druid just hit on another point I missed originally - but I'll make it here - regardless of any ONE thing - we all know that it will take a combination of things falling in place to pull SIRI ahead.

    Example: Dealing with the B/K issue - DONE
    Example: Dealing with the dilution - DONE (thanks for the explanation Homer)
    Example: Dealing with the debt for 09 - Essentially done/delayed

    I think even a moderate buyback at the current SP - and AVOIDANCE of a R/S (he needs to use PR and clearly state this - which he hinted at when he said it would only be used to avoid delisting - which may not be necessary if they go with the market cap versus $1 SP)

    Couple the above with even a minor marketing campaign - (would appreciate input on guesses for that cost here) and you've got a recipe for substantial improvements.

    Again - I refer back to the mystery of the COH. The past few weeks show us that MEL is clearly multitasking (I hate the word - but it applies) and he appears to be going at this from many angles at once...

    His biggest downfall IMHO is the lack of communication with investors... of course that also MAY have been for a reason - ie. to prevent the main media adversaries from having time to react to any good news.

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