If, when, how, and why will Liberty take a controlling stake in SIRI?

[JohnnyIrishXM]

Homer.... I don't think conversion is a question. What I think is the question is When?? not if.....

Conversion is a question in my mind,i don't think they will because any new issue of shares they have to give liberty 40% to satisfy second phase.They are guaranteed 6 seats on the board with preffered shares and first in line to get paid if bk or takeover..Sirius can issue new shares to cover debt and liberty gets 9.9% stake with new shares and sirius just has to hold enough shares after R/S to cover 40% to liberty.EX:7bil issued shares after 1-10 R/S
leaves 700 mil shares,they need to hold 480 mil shares to convert at liberty's desire..

[imromo24]

I don't know if this is possible...but Brandon (i think but now can't find the post) posted in the other thread about consolidating the spectrum with the recent FCC filing from XM....he said that SIRI could consolidate the ground repeaters and then sell the rest to Liberty Media.....the value is about $530 million....

Could we pay off the Liberty debt....get the 40% stake back....and give them the half of the ground structure that we don't need anymore in exchange....eliminating dilution....sort of a stock buyback.

just a thought.

[Demian]

Could we pay off the Liberty debt....get the 40% stake back....and give them the half of the ground structure that we don't need anymore in exchange.

You understand that Liberty got the 40% stake in exchange for high interest, loan shark type debt, right? Paying off the debt does not get that 40% back. Why would Liberty want those ground repeaters? I can't see any reason that they would need or want them...

I like the idea of a the backdoor buyback concept, but I just can't see it happening. I see Liberty increasing their stake more likely than reducing it......

[homer985]

I don't know if this is possible...but Brandon (i think but now can't find the post) posted in the other thread about consolidating the spectrum with the recent FCC filing from XM....he said that SIRI could consolidate the ground repeaters and then sell the rest to Liberty Media.....the value is about $530 million....

XM has some 700 repeaters and Sirius about 200. Assuming they do the consolidation, I could envision perhaps 700-800 repeaters remaining when combined. That would eliminate between 100 and 200 repeaters.

As for selling that equipment, Liberty Media would have no need for it; furthermore, the rough cost of each repeater is approximately $64K (based on older XM documentation). Assuming the value increased slightly on the equipment over the years, to perhaps $70K -- selling 200 at that rate would only raise approximatley $14MM.

$14MM would not put much of a dent in the $530MM owed to Liberty. Furthermore, the equity deal to Liberty was in addition to doing the deal in the first place; the deal is done, there is no getting the equity back. Liberty has no reason to give it back.

Also note, that they're not going to get rid of half of the repeaters... XM very much needs the 700 they have. At most, the 200 Sirius repeaters would be consolidated into the XM repeaters -- then eliminated. I do not see the number dropping below the 700+ that XM has now, without it hurting the XM signal.


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[imromo24]

thanks.

I look forward to positive results nonetheless...

[imromo24]

You understand that Liberty got the 40% stake in exchange for high interest, loan shark type debt, right? Paying off the debt does not get that 40% back. Why would Liberty want those ground repeaters? I can't see any reason that they would need or want them...

I like the idea of a the backdoor buyback concept, but I just can't see it happening. I see Liberty increasing their stake more likely than reducing it......

ah, i see now, yes...there in it for good.

[Demian]

ah, i see now, yes...there in it for good.

They are in it to make money for sure, but I don't know about for good. My fear is that they could take control, possibly with another large holder, and sell the company for a quick buck......

[imromo24]

sorry i had to cut the post short...what I meant was that they are locked in like a siamese twin and we don't have a way to cut them free.

Now that im thinking it out, this reminds me of when Mel said he would love to take the company private.

[homer985]

They are in it to make money for sure, but I don't know about for good. My fear is that they could take control, possibly with another large holder, and sell the company for a quick buck......

I don't think that that is Liberty's modus operandi -- they invest and buy companies, I don't think that they buy and flip companies to make a quick buck.




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[Demian]

That may be true Homer, but what about them taking the whole company for themselves and offering the remaining shareholders a quick buck? I fear that there would be many who would take less than the company is worth - when the quick dollars were flashed in front of their face.....

I guess not for at least 3 years on that though.......unless the price was right. Liberty's price may be a lot less than some common longs would want.....considering they got their 40% stake in exchange for high interest, loan shark loans - better than free, really.....