Sirius XM To Avoid Chapter 11
In a turn of events worthy of a Hollywood movie script, the New York Post is reporting that “John Malone’s Liberty Media is offering Sirius XM a bridge loan of several hundred million dollars to help pay off debt that matures Tuesday.” The article also mentions that Liberty and Sirius XM are working together on a plan to deal with Sirius XM’s other debt obligations due in May and December.
It appears that Sirius XM has in fact accepted the offer as the following news had come across the Dow Jones Newswires just hours earlier:
S&P Removes Sirius XM Rtgs From CreditWatch Neg
Last update: 2/13/2009 4:31:38 PM
(MORE TO FOLLOW) Dow Jones Newswires (201-938-5400)
February 13, 2009 16:31 ET (21:31 GMT)
With literally hundreds of news agencies reporting that Sirius was heading for a Chapter 11 filing as early as Tuesday, it would appear that the bondholders were given notice of the events that were going on behind closed doors at Sirius XM headquarters.
Taking a step back to review the bigger picture, this should generate a lot of excitement on Wall Street. With credit markets making it hard for struggling companies to survive in the current environment, news of such a bridge loan warrants center stage as other companies may now look to the lead provided by Mel Karmazin and John Malone.
This could turn out to be a SIRI investors best case scenario as the news had broken after 7 p.m. yesterday. Facing a three day weekend, most traders had left for the weekend yet the stock which had risen nearly 42% during the regular market hours on Friday, rose an additional 23% as the news was breaking. With all of the outstanding debt issues currently being addressed, Tuesday trading may bring new life to the struggling equity. The nagging debt has held SIRI shares down since the completion of the successful merger of the two U.S. satellite radio providers. With the company’s debt issues removed, SIRI investors who have held their shares may finally be rewarded.
Position: Long Sirius XM
Is this any further news than what we already heard through the post late friday ? I am excited, but still cautious.
“SIRI investors who have held their shares may finally be rewarded.”
Really? I’ve held and I need it to go UP about $3.30 to breakeven. My average cost is about $3.40!
I knew it was a good sign that my order for 8000 shares at 9 cents placed 2pm Friday never filled. If it had filled, that might have been a bad sign, but then I would now have a $1.40 average instead of $2.50. I too, like an a***ole have held SIRI (and XM) for ten years.
I want to find out why Etrade doesn’t allow for decimal trades like Scottrade. It has really hurt me making moves. Let’s say you could have put your order in for .091, it may have bought then. Market orders are too dangerous with all the manipulation, so most of us have been forcd to round penny orders and have not been able to buy or sell at times.
This is why I only trust a broker. I found me a good guy through Wachovia and he’s not too fond of my transaction in this company, but he understands why I’m doing it.
Schwab allows in the hundredths of a cent, at least (for example .0947).
I quit bothering with decimals a while ago….no one seems to take them. I just round it forward and take the best Etrade gives me.
I have a theory on the constant threat of bankruptcy, even though it may be very true. If you were a hedgefund of someone interested in convertible swap or shares for debt, you might be alot more interested if you could cut a deal with the shares as low as possible, like .05 cents. There are alot of very strategic moves going on between all parties, but I have to say that I think Mel will pull this off, save shareholders and this will cement his legacy.
Mel – close this deal and write a book !
I hope like mel stated that the Sirius dog will take a shyt on the the shorts leaving them with only bacon strips on their shorts.
saint valentines day short massacre with this article!
“It ain’t over until it’s over.”
But positive news non the less.
I was willing to hold to 0 on this one, now maybe we will see 10 eventually. Any predicitons for Mondays close?
For all those who bash Mel for merging the companies..had the FCC not been bastards about the whole deal and held it up….and had the credit crisis not come just in time to spoil our party, you would all be on your knees thanking Mel. OK…so he may not be the best at PR with the shareholders, but to imply that he was sabbotaging the shareholders is ludicrous. Mel did not sign Stern to his outrageous contract and has been focussed on growing the company while reducing costs. The merger was part of this larger picture and he did not care about you short term investors. This stock has been hurt so bad by the day trader expecting quick gains and beating down the management when they don’t get them because management is focussed on a long term picture.
Until I see a PR from SiriusXM, I am taking this theory/story with a grain of salt. If this is true, how ashamed are all those news wires and ANAlysts calling this company dead.
SXMI… I am right next to you and waiting for some type of official release from the company. All we are seeing is this unnamed source or that unnamed source.
I hope it is all true
vaporgold
If this is true, how big of a short covering will we see? There are currently over 275 million shares short, right?
Sirius Xm Radio Inc. $ 0.11
SIRI 0.03
Short Interest (Shares Short) 271,931,400
Days To Cover (Short Interest Ratio) 11.0
Short Percent of Float 7.86 %
Short Interest – Prior 219,626,600
Short % Increase / Decrease 23.82 %
Short Squeeze Ranking™ -84
% From 52-Wk High ($ 3.89 ) -3604.76 %
% From 52-Wk Low ($ 0.05 ) 50.48 %
% From 200-Day MA ($ 0.55 ) -423.81 %
% From 50-Day MA ($ 0.12 ) -14.29 %
Price % Change (52-Week) -97.60 %
Shares Float 3,460,000,000
Total Shares Outstanding 3,513,400,974
% Owned by Insiders 1.50 %
% Owned by Institutions 36.10 %
Market Cap. $ 368,555,762
Trading Volume – Today 263,495,557
Trading Volume – Average 24,670,600
Trading Volume – Today vs. Average 1068.05 %
Earnings Per Share -2.18
PE Ratio
Record Date 2009-FebA
Sector Services
Industry Broadcasting – Radio
Exchange NAS
Data Provided Without Warranty
http://www.shortsqueeze.com/?s.....t+Quote%99
“Clipp-ity clop…clipp-ity clop” — that’s the sound of Sylvestor Malone riding in on his white-knight horse crying, “Liberty!”.
’bout time something happened
Anyone that does not have their adrenaline pumping heavily on the Tues. open and subsequent days’ movement may not be heavily exposed – had this news not come along, anxiety and despair would be the predominant mindset as it has been. So, caution goes to the wind and let’s enjoy the high. There will be ups and downs to come, but if we hung in there until $.052 then I think we’ve earned the right to do that. I actually got hammered last year with this stock (bought at an avg. price of $.70 and sold at $.121 (20K sh), bought again a couple of weeks ago at $.143 and sold at $.080 (45K) and then bought at an avg. of $.092 and hold 35K sh. I, no WE, need this.
With all due respect… there are many of us that have been “hammered” by the stock a lot worse than that!
I believe that most shorts are investors in the converts and are there to protect their investment. I think you may see a short covering as converts are paid off.
I have and avg cost of about$2.50/$2.75 and have held on for dear life for about a year. I have told myself how stupid to put all of your eggs in one basket. But I liked the concept and still do. If I could just get half back it would be a miracle. Is that real investing or just plain stupid? I went from $200k+ to almost zero. Abraham Lincoln is no longer my hero. Go Liberty.
Yeah Kenneth. I’ve got about $160,000.00 into it. Mostly retirement funds. All in one basket as well. We know better but…… Got down to about $7000.00. I’ve had a lot of cold sweats in the middle of the night. Learned a GREAT lesson. Hopefully I can look back and smile!
A bunch of us are in the same boat. I have approx $ 140K in this stock too. Almost went to zero…..who knows it still may. I hope not. I will be holding for now. Good Luck to all.
Like Cramer said when he interviewed Mel…. He said sophisticated investors buy the converts and short the stock. DOES ANYONE HAVE A CLUE HOW MANY PENNIES ON THE DOLLAR ERGEN BOUGHT SIRIUS DEBT? VERY CURIOUS. Brandon do you know??
Ergen could turn around and outbid Malone so not to risk Sirius filing and his bonds worthless or more likely just losing the company to Liberty.
These guys have enormous EGO’s and do not like to lose and as important as $ is, the EGO may even distort their thinking and supercede all.
This is what we hope for !
Sure. I’ll play.
I believe Ergen picked up most of the debt at about a 20% discount. Here’s where it could get very interesting.
I think its safe to assume that as the original bondholders sold their bonds, that they would have covered their short positions.
What if, and I know everyone loves my “what if” scenarios, Ergen was shorting the stock expecting the company to default.
He may have made millions on the bonds, but if the stock price spikes in premarket he stands to lose a lot more than he has gained.
Brandon…. Keep going with your “what if’s” they bring fresh perspective to a tired story!
he could have been shorting it to bring the pps down so as to make it more difficult, if not impossible, for siri to convert their other bonds to equity, or to issue new stock to obtain funds.
SiriusXMInvestor,
I dont think it is as cut and dry as dreads post. Remember that number is as of the begining of Feb. Not now! and after a few days of 200M+ trades it is very hard to say. With the price below .10 why would shorts hang on? Insanity would be the only reason. Many I am sure got out in the .08 to .06 range. Anyway hers hoping i am wrong.
change 200M+ trades to 200M+ shares traded
Confirmation of this Bridge loan is the only thing we need to see a positive move in PPS. The loan still needs to be repaid by SiriXM in the time allowed in the loan. Positive 4th qtr numbers along with the possibility of APPL streaming SiriXM may bring in new needed revenue.” NICE”. Mel may mention this in his earnings call then……………. BAM!!
http://www.financialpost.com/m.....id=1281633
As part of an accord, El Segundo, California-based DirecTV could buy out existing shareholders and repay Sirius XM’s debts, said one of the people, who declined to be identified because the talks aren’t public.
that line from the article you posted brandon caught my eye… what’s your take? at what price do you think is reasonable for a buyout?
brandon, i think that’s an old article…is there something in the article you were using it to reference, because the DirecTV transaction mentioned in that article does not appear to be the same one as currently reported in the Post.
That iPod app is going to be huge. That’s the avenue that was needed to take off and now, with the necessary cash to move forward, Sirius XM is well positioned.
Maybe 2009 will not be so bad after all.
Long SIRIXM
-Jmix
-Austin
Glad to hear this !! I guess last night when I posted, but was not sure of the news I had found………….
Reply DRALAND says:
February 13, 2009 at 6:57 pm
just found this online at my brokerage house,
S&P Removes Sirius XM Rtgs From CreditWatch Neg Last update: 2/13/2009 4:31:38 PM(MORE TO FOLLOW) Dow Jones Newswires (201-938-5400)February 13, 2009 16:31 ET (21:31 GMT)
Doesn’t this equate to an Credit Rating UPGRADE ??
………………it may have really meant SOMETHING ??
Way to go guys !!
Thanks for the update !!
I saw that on schwab and would that totally inconsistent with a chapter 11 filing….like the S&P had some information that the rest of us did not have.
did they upgrade merely because of the 172.5M December bond extension? or, did they have other information, too?
My concern is the senior debt purchases. To benefit the most over their arch nemisis, the debt purchase must be followed by a bankruptcy filing.
Is the hatred in their hearts so strong that they purchase senior debt and then purposefully drive the company into bankruptcy?