Liberty’s Sirius XM Deal Clarifications
With the news surrounding Direct TV and Liberty, we once again have discussion about Liberty’s investment into Sirius XM. Among items on the table is that the Liberty deal with Sirius XM can be reversed for a 5% premium. The clarity that is needed is that it is the LOAN (Phase 1) portion of the Liberty deal that can be bought off at a 5% premium, and not the 12,5000,000 preferred shares (phase 2) that Liberty has.
Simply stated, Liberty owns the 12,500,000 shares outright, and there is no mechanism calling for the company to buy them back at a 5% premium. The 5% premium applies to the LOAN. Additionally, the company would need the cash in order to make such a move, and they do not have that kind of cash on hand. Yes, dilution is a possibility, but there are terms within the deal that protect Liberty from certain amounts of dilution.
The only mechanism that could possibly reverse the 12,500,000 preferred shares is if Liberty were to default on the $150 million dollar payment in December that is a part of the phase two agreement. Given the substantial gain in value already for Liberty, they would be foolish to not pony up the dollars.
Investors need to break the SEC filing on the subject down into its respective parts. There is nothing in the agreement that would compel or force Liberty to sell back those shares unless they are willing to do it. That being said, a separate deal could be worked out if both Liberty and Sirius XM desire one, but as yet such a deal does not exist.
Position – Long Sirius XM, No Position Liberty
I still believe that AT&T buys DirecTv as well as Sirius. It makes sense to add the product to the phone package much as they do with Auto’s. A free 6 months and then if you want it you pay for a sub. Its why Mel wanted the poisen pill to have some leverage in pricing the company. Remember Malone has a great long term relationship with AT&T.
Tyler, excuse me but who needed this clarification…. why all the speculation?? Very confusing and not really worthy of an article, IMHO
Cos…..
I got a few emails today because there are some who read that the 12.5 million shares of Liberty can be reversed. Having that thinking is making a mistake of over $1 billion. Liberty owns their shares outright and there is noting Sirius XM can do at this point to get those shares back. That needs to be clear to people.
Tyler,
Thanks for getting back but, I thought that was already pretty much spelled out in the agreement between the parties…. I always understood that other than the loan paper for the dollars stated, that the main motivation, aside from the 15% interest rate, fees for lending ($30M I think), and 2% on the unused portions of the money in waiting (such as the 12/09 Bond pay off), that 12.5K Preferred, now B-1, was just a bonus for loaning the money that’s worth 40% of the Company…. Conversion at the holders discretion at 2.5B shares of the common or something like that… Maybe I am mistaken, but isn’t this a bit of Old News….
cos! great to see you here, but confused as to why you seem to be going out of your way to bust Tyler’s chops here especially since your posting on this site has dropped off so drastically.
I for one am glad for the clarification as well as yours and homer’s (in the forum section) (and John too 🙂 input. Lot’s of loose speculation elsewhere that can get confusing. Input such as yours, Tylers, and Homer’s help us “not so savvy” to keep the eye on the ball.
Hope to see you on the forums more often.
take care
Cos….
It is old news that unfortunately got revisited again today, which necessitated that I revisit it again.
Hopefully people will make the calls and this can be a dead issue going forward
isn’t this yesterday’s news? why are you not talking about the Liberty/DirecTV merger? isn’t that the real news today? and, doesn’t that impact SiriXM, even if indirectly?
shark..
If anything the Direct TV relationship is now further from Sirius XM than it was before. There is no real connectin in the direct TV news.
Agreed, and it was never about Direct TV….. Wasn’t it always about Liberty Media, as parent company to the Entertainment side of the business, with Malone as the “Stake Holder” that is involved in the Sirius Xm Radio deal… Agreed that Malone is taking Cash for around 11% of his DTV holdings, 35% – 24%, gives DTV control back and adds STARS and Liberty Entertainment to the DTV fold, everything else around all of Malone’s holdings has really been nothing but speculation and ignorance as it relates to the SXM, Liberty deal…
Liberty owns 40% of Siri…Liberty’s deals with DirecTV relate to Siri.
Hey Guys, I’m back from a hiatus, and Yesssssssss
THE Real News of the day is/was the Liberty/DTV ‘merger’………I’d like to know what the !!!! is going on as well and how that may/nt impact SIRI.
In the interim, when is the uptick coming back, cause every day like clock work, the drop happens after the spike at about 10-11:00………………..suks big time !!!!!
Very interesting regarding the Liberty/Direct deal. Somethings churning….no pun intended there! Thursdays news should even be bigger, much bigger maybe. Agree with draland how it was funny today the 10/11 o’clock drop in the share price didn’t go today. Today was a fairly nice rise to the end (even though in fractions of a cent) but none the less its showing a different pattern. I may buy a few more shares before Thursday.
You and Brandon really are from different ends of the spectrum. He has a blog stating it can be unwound and you stating it can not. I even accused Homer of being you because your viewpoint on this was the exact same. I wish Brandon was right, but it appears you are. Once again it goes back to a clarity issue with SiriusXM management or should I say lack of. Will they ever really clarify our options. Doubtful.
Paul….
First, I am not Homer nor is he me. Homer and I have both followed these equities for quite some time though.
The documents were very clear (the 8k as well as the registration statement which are available on the Sirius website). I think that most people understood the deal clearly and the fact that the shares were Liberty’s to keep. Normally this would not be an article except for the fact that Brandon had misjudged the deal about a week ago, and then added to the confusion again today.
As I have stated before, a simple phone call would clear this up for anyone who had a question. Even though I was sure about my position (that disagreed with Brandon), I still made the phone calls to double and triple check my thinking.
With Liberty shares representing over $1 billion dollars, and 40% of the company, readers deserve to have clarity in what will and/or can transpire.
Even if 5% provision existed, the company can not buy back shares until they are showing a profit. Thus even with dilution, they would not be able to buy the shares.
This was another misconception that people had. Mel once stated that he would love to get this company to a point where they could buy back shares. People then ran around thinking that it would be a good strategy for the company. The problem was that people made an assumption that Mel could do this at any time. He couldn’t, and by his quote was not indicating an immediate buyback. I have seen people in hopes that a share buyback would be announced at various points over the years. Shares can not be bought until profits come.
Hopefully this issue can rest now, and readers will understand that there is simply no way to get back thoose shares.
Tyler, thanks for the response. I laid to rest the Homer thing awhile ago. As a shareholder and unbiased, one can see how info gets distorted. I think that everybody brings something to the table. I personally like reading all the blogs to gather a consensus. I might not always like what you write or what Brandon writes. The key is being open minded and accept all as opinions until proven as a fact. You both do a great job in trying to keep everybody up to date. Keep it up.
It is getting ridiculous reading this site lately trying to figure out who has an authentic opnion and who is just another Brandon mole harrassing Tyler.
doesn’t brandon post articles on this site? why would he have a mole harassing tyler?
Brandon is no longer affiliated with Siriusbuzz. You can find him on satwaves
Otone, sorry if it seems like I’m going out of my way to bust Tyler… it actually is the article that I was commenting on… As far as not posting here, I post as often as I can, here, there, and anywhere else that I choose to frequent… I didn’t know that there was a “Count” of posts that is relevant to any discussion…. This “Thing” between the sights is getting old to me as a poster and reader… Not what I come to forums and blogs for…. JMO
sxminvestor, “…figuring out who has and “Authentic Opinion and who is just another Brandon mole harassing Tyler”
see the is the BS that I am talking about.. and what is and Authentic Opinion??
Cos, fair enough. However, Tyler’s response was directly related to Brandon’s typical loose cannon article. I certainly appreciated it becuse I was wondering the same thing. I looked to see if you had a comment on Brandon’s article… same topic right?… and yet his is not “old news”? Let me ask you this, why is it ok to comment or clarify a bullshit article on MF, yet nonone can touch BM bullshit. What? Is he Obama or something? Sheesh.
By the way, an authentic opinion is one that stands on it’s own and doesn’t have a hidden ajenda. You are a very smart person Cos, so I’m guessing you knew that already. And I’m personally not implying anything, so don’t get mad… just defining “authentic opinion”.
Sorry to see you followed the herd. The community here went through a very tough time and right when it started getting good (Sirius finally showing some signs of life), you all bailed, and followed the main person who stirred up a bunch of the bad feelings.
Hell, Newman wouldn’t do jack shit to moderate here and now where has he gone? To the land of 3 strikes and your out. Funny really.
I see a lot of people saying the same thing you do about it gets old to see the “public” issues these to sites seem to have, well, we haven’t walked in their shoes have we? We get angy at Tyler and Charles for responding to bullshit that is said on the other site, yet here you are defending your posts… Works both ways right?
Lots of bad feelings obviously that need to get worked out.
But hey… it’s all good for now… Sirius is up! 🙂
Take care Cos. Still hope you come back and post here. Guarantee the folks you want to have discourse with would comment here as well.
Otone, do we really need to do this…. You Said:
“Cos, fair enough. However, Tyler’s response was directly related to Brandon’s typical loose cannon article.”
Then why didn’t Tyler say so….?? Without him stating that it is a rebuttal of Brandon’s article as YOU say then it is “Old News”
You also said this:
“I looked to see if you had a comment on Brandon’s article… same topic right?… and yet his is not “old news”? Let me ask you this, why is it ok to comment or clarify a bullshit article on MF, yet nonone can touch BM bullshit. What? Is he Obama or something? Sheesh”
I have no idea what you are talking about and just will not respond…. I will say that I don’t go there to comment then come here to comment on the same “Old News”… I don’t have that kind of time or desire / motive…
As far as me “Following the Herd”…. I followed posters there and continue to follow posters and Authors here…. If you are sorry for me, don’t be… I am fine and have managed not to be trampled by them or anyone here…. I will continue to post where I choose unless there is a problem with that… The “Hard Times” this site has gone through or the other will go through is of little interest to me… I am only here to find out the facts… and to post them as I understand them… If clicks, and clubs, or some kind of loyalty from me is what your looking for, I am sorry for you…. It is a Blog Forum and a place to state opinions… If you and SXMInv…. decide that my opinions are not Authentic under your definition… so what…. move on and give us the best of what you know about this company… stop trying to trivialize the BS between the “Principals” of this site as though it was your own… Get back to talking about the company…. SXM…
Cos… had a well thought out response, then said “screw it” so…
To answer your first question, no, we don’t need to do this. Not worth it and nothing of substance would come from it.
Good luck man, and look forward to seeing your posts. The good news is that maybe we will start to see some consistent good news from this company…maybe a hint from the recent WSJ article.
I thought he wrote this same article last week. Also, the Wall St. Journal was able to see that the Liberty/DirectTVdeal makes it easier for DirectTV to partner with phone and sattelite providers. Savery says the deal puts Sirius and DirectTV further apart because he saw that Homer said that. Hmm… maybe Homer really is Savery? Maybe that is our next big revelation in this drama. Interesting….
LOL…..
Nope, I am not Homer.
The deal puts them further apart because Direct TV is will no longer be in the Liberty Media umbrella. This is not to say that deals can not happen, it is simply noting the obvious. Sirius XM, from a Liberty Media standpoint, is no longer under the same umbrella.
The Direct TV situation indeed makes potential deals with a telco easier.
I suppose the homer = Tyler/doberman accusations were inevitable… especially given the lack of professionalism that I’ve been seeing bantered about by the users and representatives of Brandon’s blog. It is the next logical step and does not surprise me to see occuring. I expect to see more of this – as a way to discredit Tyler or myself… the only problem is that “homer” is an alias — and therefore shouldn’t garner much credibility, without being attached to a known person. (sorry for the 3rd person speak)
FWIW, those that have followed Sirius/XM for long periods of time – would note that Tyler and I had many disagreements on the direction of DARS 6-7 years ago on the old Raging Bull board… those arguements were quite epic, IMHO. It’s where I honed by by DD skills, aways back when.
BTW, perhaps the reason Tyler and I agree so clearly on a somethin — is because it actually IS a fact and not an opinion?
——–