Homer
I'll take $4.99 per share right now!!!
As always, Homer you are probably right. Guess we will have to wait 2 years for the answer.
SIRIUS XM SATELLITE RADIO FORUM
Homer
I'll take $4.99 per share right now!!!
As always, Homer you are probably right. Guess we will have to wait 2 years for the answer.
also is there a possibility that this could be what its claimed to be and just protection of their tax write off's even if its just for malone to use them.
Trip
No matter how it plays out, it probably is a good thing for the shareholders.IMO
4.1 StandstillOriginally Posted by trippingthespeculatingpos
(b) Purchaser agrees that from the second anniversary of the Closing Date through the third anniversary of the Closing Date, without the prior written approval of the Independent Common Directors, none of Purchaser or any of its Affiliates will, directly or indirectly in any way, acquire, offer or propose to acquire or agree to acquire, Beneficial Ownership of any outstanding shares of Common Stock of the Company if such acquisition would result in Purchaser or its Affiliates having Beneficial Ownership of 49.9% or more of the outstanding shares of Common Stock of the Company, unless such acquisition or offer or agreement to acquire such Common Stock is made pursuant to a Permitted Tender Offer...
(e) For purposes of this Agreement,
(4) “Permitted Tender Offer” is a cash tender offer for all of the outstanding shares of Common Stock that are not Beneficially Owned by Purchaser or its Affiliates at a price per share greater than the Closing Price of the Common Stock on the trading day immediately prior to the earlier of the public announcement or commencement of such tender offer.
http://www.sec.gov/Archives/edgar/da...874/dex455.htm
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Essentially, they can't go over 49.9% for 2 years... unless they make a cash tender offer for all remaining outstanding shares; otherwise, they have to wait 3 years to go over 49.9%.
A slight correction to something I said earlier -- after 3 years, they don't have to tender to all remaining shares. That was my misunderstanding... the tender is only for between years 2 and 3....
...which ironically, is the same time the poison pill is slated to expire.
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Yes, it could always be used for that... regardless, it appears to be mostly protecting Liberty's investment.
Keep in mind, that Liberty has openly discussed Sirius' NOL's publically before -- so it doesn't surprise me to see this. I'm just taking it a step further and saying it won't surprise me to see Liberty buy up the rest of the company too.
The only bad I see in this is that the common holders may not get what they thought they would - if they have to sell earlier than they want to. The good is that I don't see Liberty allowing Sirius to go under.
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thx homer i really apreciate it, first i see this "b) Purchaser agrees that from the second anniversary of the Closing Date through the third anniversary of the Closing Date" meaning this only applies between that 1 year time frame? what about from the 1st anni to the 2nd anni? also "without the prior written approval of the Independent Common Directors", they can go around this if common directors see a positive too it. I think if liberty wants to buy them out and moves aggresively to do so they will, but it all comes down to does liberty really want that? they might just be happy with 50%, not to mention wouldnt it be a bit difficult to get goverment approval?
Last edited by trippingthespeculatingpos; 04-29-2009 at 10:31 PM.
ahh i see you are quicker on the draw than i am :O yeah i know malone mentioned it was part of what made sirius attractive. Thats why im assuming they came to this agreement to ensure malone could get what he wants his main reason for investing in siri, with no risk of any1 trying to **** with it.
From an older Wall Street Journal article -- this pretty much sums up why the poison pill was implemented... this was published at the end of February. Be sure to read it thoroughly.
Take note of the last 2 paragraphs especially; and again, this came out on February 21... 2 months ago.
http://online.wsj.com/article/SB123517735084237725.html
The Lure of Sirius: Tax Losses Article
By JESSE DRUCKER and MATTHEW KARNITSCHNIG
Some investors are baffled why media titans John Malone and Charles Ergen are competing to throw money at Sirius XM Radio Inc., the money-losing satellite-radio company that was perilously close to bankruptcy.
But in fact, the company's most valuable asset could be precisely all the money it has lost.
Sirius XM has at least $6 billion of tax losses, according to securities filings. That means that the losses it has accumulated over the years can be used as deductions to cut taxes on future profits. As long as those losses stay with Sirius, they have little value, securities filings show, because the company's future prospects for significant profits are still slim.
But in the eventual hands of another company, like Mr. Malone's Liberty Media Corp., those tax losses could become extremely valuable, helping to wipe more than $6 billion in taxable income off of its income tax returns -- thus some day cutting Liberty's corporate income-tax bill by more than $2 billion.
Tax concerns are often a big driver of corporate deal making, but few players maneuver through the tax code as thoroughly as Mr. Malone. In 2006, he acquired the Atlanta Braves in a way that enabled Liberty to effectively cash out its stake in Time Warner without incurring taxes.
Companies often have tax losses. But experts say it is unusual that they are potentially a firm's most valuable asset, as with Sirius. The only asset that is comparable is the company's collection of radio wave spectrum licenses granted by the Federal Communications Commission valued at $2 billion, according to a Sirius securities filing. "That's uncommon that the [tax loss] would be ... the most valuable asset," said Robert Willens, who runs a corporate tax advisory firm.
However, for Liberty to maximize the use of those tax losses, it must navigate Internal Revenue Service rules intended to prevent companies from acquiring others solely for their losses -- so-called "trafficking in losses."
Indeed, that issue is getting renewed attention: In late September, the Treasury Department lifted those tax-loss restrictions for some companies to encourage a spate of bank mergers. Congress effectively repealed Treasury's move for future bank deals as part of the recent stimulus package.
The IRS curbs already kicked in after the Sirius XM merger was closed in last July and limit how much of the losses can be used as tax deductions each year.
Based on those rules, Mr. Willens estimates that, for the first five years that the tax losses could be used, Sirius is limited to about $580 million a year in deductions stemming from the losses. After that, it drops even lower, to about $250 million a year for the next 15 years. Thus, all the losses would be used, but not immediately, which reduces their effective value. People familiar with the matter confirmed that those estimates are in the range of the company's working projections.
Another complication hangs over these tax losses. If ownership of the company changes again, the use of the tax losses would become even more limited, according to IRS rules. That is because the restrictions are calculated based in part on the market value of the company -- which is roughly 10% of what it was when the Sirius XM merger closed.
Under IRS rules, the restrictions on the use of the tax losses kick in if the company's major shareowners increase their ownership stakes by more than 50 percentage points. Liberty's current 40% investment is restricted to no more than 49.9% for the next three years, which prevents the Liberty deal from triggering another ownership change.
There is an additional wrinkle: If another investor purchased enough stock to give it a stake of 5% or more during the next three years, that could combine with Liberty's stake to trigger those restrictions anew. Sirius can implement trading restrictions to prevent that. At current values, a new restriction on the losses could cause Sirius to lose about 80% of its tax losses over the next 20 years, according to Mr. Willens.
Absent such changes, Liberty would then be free to acquire the rest of Sirius in three years and use all the losses to shelter taxable profits elsewhere.
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Last edited by homer985; 04-29-2009 at 10:43 PM.
This may be a total noob question so forgive me in advance, but what do you think happens to the SP while Liberty waits to take full control?
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