Originally Posted by
homer985
It's already happened.
Look at a pie that is cut into 10 equal pieces in size... you and a bunch of others own all 10 pieces of that pie as it is... Now take away 4 of those pieces. You and all those other investors now only own 6 of those pieces. Your ownership percentage in Sirius just got chopped... instead of 100%, you now own just 60% of it.
Wiped out? Exaggeration. The market absorbed the news already. The market value of the equity increased significantly today... the question is, where should Sirius be valued in a good economy without the threat of bankruptcy?
If you think it should be valued at $6BB -- then prior to the Liberty dilution, the stock pps would be $1.57/share ($6BB divided by 3.8BB shares); however now that Liberty gets their 40%, the stock pps would only go up to about $0.95/share ($6BB divided by 6.3BB shares). Because there is more equity now.
At $6BB, instead of $1.57 you get $0.95/share. At $10BB, instead of $2.63 you get $1.58/share.
That's the impact of significant dilution....
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