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  1. homer985 is offline
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    10-20-2008, 05:26 PM #11
    The 2.5% Notes had $300 million outstanding, now its down to $270 million. These Notes previously had a conversion price of $4.41/share -- Sirius exchanged them instead at $0.455/share.

    It is more dilution, but at this point - does it really matter?

    The verbiage makes it look like Sirius is negotiating with individual holders of these Notes to exchange them at current prices -- rather than having to buy them back when the mature.

    They will have some positive FCF this quarter, so they likely wouldn't need to do this for all $300 million, but I wouldn't be surprised to see them do it on an additional $170 million. It all depends on whether or not the holders of these Notes want to exchange them like this holder did.


    BAD = Significant increase in dilution
    GOOD = Reduction of maturing debt... less pressure to refinance it



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  2. homer985 is offline
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    10-20-2008, 05:28 PM #12
    They reduced their carrying debt by $30 million -- and the need to refinance this amount next year, that is the only good thing; however they did it at the expense of the shareholders footing the bill, as they say.

    But with the stock being under its book value and with so many billions of shares outstanding, it makes you wonder if that matters anymore?

    I'm shocked the holder of these Notes did this, unless they believe the price is going up? Either that or they sold them already in the last couple days. They can't be selling them now, because the price is already under the price they converted at... I'd be shocked that a holder of this debt took the conversion deal -- only to sell them under the conversion price. They'd already be out $5 million, based on the current pps versus the conversion price.


    I guess my point to my "significant" reference was more because I fully expect to see a few more of these filings, reducing another $100~$200 million more. That would be significant in the long term.

    We'll see where they go... remember, Goldman Sachs is the big holder of these Notes. IIRC, they hold $120 million worth of these Notes.



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  3. sxminvestor is offline
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    10-20-2008, 05:29 PM #13
    Quote Originally Posted by homer985 View Post
    The 2.5% Notes had $300 million outstanding, now its down to $270 million. These Notes previously had a conversion price of $4.41/share -- Sirius exchanged them instead at $0.455/share.

    It is more dilution, but at this point - does it really matter?

    The verbiage makes it look like Sirius is negotiating with individual holders of these Notes to exchange them at current prices -- rather than having to buy them back when the mature.

    They will have some positive FCF this quarter, so they likely wouldn't need to do this for all $300 million, but I wouldn't be surprised to see them do it on an additional $170 million. It all depends on whether or not the holders of these Notes want to exchange them like this holder did.


    BAD = Significant increase in dilution
    GOOD = Reduction of maturing debt... less pressure to refinance it



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    Homer -
    Demian asked a good question, why at these prices ? Did they not think they would be at these levels that they did not swap at 1.50 when they had a chance ?

  4. SteveSirius is offline
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    10-20-2008, 05:35 PM #14
    To try to figure out who desired to make this current share sale, we need to know if the buyer had the option to buy if and when it chose, or if the seller (Sirius XM) had the option to sell the current shares when it desired. If the buyer had the sole option to buy at a time of its choosing, then it would stand to reason that it thought the current price was a price at which it thought it was getting a good value. Or, if the purchase timing was at the sole discretion of the buyer, perhaps the buyer wanted to lock in its money because of its fear that Sirius XM would default on future payments. Or, perhaps Sirius XM wanted to show more money on hand to make it look less needy when it approached potential lenders for its future financing needs. We really don't know if any of the aforementioned scenarios are real, or if a combination of two or more of them are at play simulataneously. Perhaps with the proposed option to do a issue more shares in the future, with the proposed option of doing a reverse split, and with this current transaction, Sirius XM is trying to show it has options, all in preparation for seeking future financing, and all in an effort to not look desperate. All in all, this is very interesting, to say the least. By the way, did anyone notice that the headlines today say that the credit markets are loosening up? If true, this would add another layer to the puzzle, and perhaps Sirius XM is getting its ducks all in a row to secure financing?

  5. aberyc is offline
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    10-20-2008, 05:36 PM #15
    my theory on todays 8k as posted on yahoo

    What does this mean?

    A. 30.5 million of the Feb 09 debt has been paid down in exchange for 67,038,070 shares of SIRI at near its current value of 0.38 a share.

    Q. Why would these bondholders agree to convert at this point?

    A. The share price of this newly merged company is at a historic low, since these particular bondholders have opted to convert, I am assuming that they feel the share price will increase from hear and they can profit from ownership of the stock.

    Q. How does this bondholder know that the PPS will go up from here, and why would Sirius be so ready to allow a convert when its shares are priced below book value?

    A. The share price is depressed because of uncertainty about the ability to refinance the debt due in 2009. HMMMM If I was a lending institution that just recieved 67 million shares in a company with share prices depressed on worries about debt, I would alleviate those worries and watch my 30 million investment double, triple or better, just by lending more money to Sirius XM. It is like legal inside information!!

    Those are my 1/20th of a siri share (2 cents).

  6. spanyo is offline
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    10-20-2008, 05:46 PM #16
    A pessimist would say that the bondholders wanted the shares to short and have already started.

    But I'm an optimist.

  7. winagain35 is offline
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    10-20-2008, 05:50 PM #17
    Or... the bondholder may have been covering a short position. Remember the holders of convertible bonds typically short the common stock.

  8. Demian is offline
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    10-20-2008, 05:55 PM #18
    How do we know if this is dilutive or not? They had some shares left over from the merger financing deal - how do we know if these are those shares or not? If they are, it is not additional dilution....

  9. spanyo is offline
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    10-20-2008, 05:59 PM #19
    I would assume that the newly issued shares were not part of the float. So now there would be 3.85 billion outstanding, with around 11 million non-issued leftover from the closing deal.

  10. winagain35 is offline
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    10-20-2008, 06:04 PM #20
    If the existing float is roughly 3.2 billion - the newly issued 67 million shares would mean the float would go to 3.26 - not 3.8 billion.

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