Sirius XM Working On Debt – Not Out Of The Woods
It is not the February debt that made the news today, but rather some of the XM debt from December of this year. SIRIUS XM Radio announced that XM Satellite Radio Holdings Inc., its wholly-owned subsidiary, had exchanged approximately $172.5 million aggregate principal amount of its outstanding 10% Convertible Senior Notes due December 2009 for a like principal amount of its newly issued Senior Secured Notes due 2011. An aggregate of $400 million in principal amount of the 10% Convertible Senior Notes due December 2009 was outstanding prior to this transaction.
In simple terms:
- There was $400 million in debt that was due in December of this year.
- The company exchanged $172.5 million of the debt thereby extending the due date until 2011.
- The new notes also went from senior convertible to senior secured (gives the holder more security).
- $227.5 million worth of the original $400 million remains as it was prior to the transaction.
- Unless or until registered, the notes or shares can not be sold. The party that worked the deal with Sirius XM has not been identified.
- Charles Ergen was making efforts to obtain some of the December debt. Whether this move was with Ergen or not is not known. However, this move does take away leverage from the Ergen activities if it was not with Ergen as it extends the deadlines.
The company has not backed away from a possible bankruptcy, and speculation is that they could file as early as Tuesday, February 17th if they are unable to take care of their obligations on the February 2009 debt due the same day. The company needs a bit less than $180 million to take care of the February debt.
From an investors standpoint, the extension of some of the debt is good news. However, the immediate concern is the February debt, and as yet there is no resolution on this matter. This leaves investors in a bit of a dicey situation, and perhaps a long weekend of mulling over their investment strategies.
Meanwhile news continues about discussion with both Ergen as well as Liberty. Ergen wants control, and the Liberty plan would not involve control.
Some may assume that the February debt may be a done deal because the company is announcing restructuring of December debt. I would caution that this is not a foregone conclusion. Ergen was obtaining February debt for leverage. He gets no leverage by extending the February due date, and perhaps will not even sit at the table to discuss anything other than control. The February debt is still up in the air, and until something is announced on that specific issue, investors should be prepared for anything over the next few days.
Position: Long Sirius XM Radio
nothing to mull. feb 09 is a done deal or they wouldn’t be doing dec 09
normal restructuring protocol
announcement on May bank debt comes next
then the cash to Ergen for Feb. done
I wouldn’t be so sure about that.
Tyler,
Good as always. I don’t think Ergens notes were the ones exchanged, and I don’t think anyone has to worry about BK on Tuesday based on the following info:
“The purchasers of the new Senior Secured Notes will be paid an aggregate structuring fee of $9.45 million, $5.07 million of which was paid in cash and $4.38 million of which was paid in the form of shares of the Company’s common stock based on the closing sales price of the Company’s common stock on February 12, 2009, which was $0.074 per share.
Why would anyone take payment in shares if they are going to BK on Tuesday?
Here is what im still having a hard time understanding.
They had 365 million dollars in november of 2008. This is a known fact. I know they have operation cost and other things they must pay but did they use this entire 365 million already?
Also, They have continued since november to bring in monies from subs and such. This being said, Its REALLY hard for me to believe they dont have 180 million dollars to take care of this debt. With the debt burdon of Dec being somewhat eased it would seem to me that they could go ahead and pay that debt. I dont know. Just seems a little hard for me to understand with all the news going on with this company its hard to tell whats going on.
They will continue to reiterate the threat of bankruptcy for 2 reasons.
Firstly, they still have more debt deals to work out and they may not be able to go lower than a certain amount on their cash on hand (we are all speculating they have enough, but it’s not a given)
Secondly, the threat of bankruptcy gives them some leverage against Ergen along with continued negotiations with Liberty.
I think what happenned today is a good sign taht it will get worked out.
It’s a bit concerning to me as well.
As I’ve posted in earlier blogs, Methinks that perhaps if these monies have disappeared, then they can only have been tapped into by the current administration for less-than-investor-value related reasons, i.e.: Bonuses and the like !! This is what the rest of American Corporate Greed and Malfeasance (there goes that word again) has been up to and why The World at large is on the brink of economic collapse. I hope and pray that this has not been the routine at SIRI, and that the faith and confidence that the business world and investors have attributed to Mel K, rings true and then some !!
I think the plan is to use cash last after all the other options.
I agree, but they don’t want to if they can refinance and they want Ergen to really believe they will file and wipe him out of his chance to take control. He might just bite and give shareholders something or take a hike.
Malone is the key-I think he is buddy to Mel-he is billionaire as well-so is Oprah-and maybe Howard and Martha
I would imagine they don’t need the ENTIRE $180 million, and that they have at least a good part of it on hand. So the amount needed must be less than that.
I agree that the Dec. move indicates positive thinking on the part of the Dec. debt taker – these are not stupid people and there are a lot of companies these days to choose from to invest their money.
They are getting the Dec debt out of way so they can get the year correct and pay off the Feb debt-the debt will be clear until 2011 then-it is better to borrow and save the cash -operating expenses -long on the great product Have you noticed that the shorters are bad mouthing the whole issue
Interesting negotiation. I think Mel ends up with Liberty on some sort of a deal. I don’t think we wll see any significant move in the equity. Max equity value is in the 200-250 million range for 2009. If the economy turns and biz picks up so will the equity. No get rich deal here.
js,
Slightly disagree here. As they continue take debt off the books…I see a cash cow, especially once the current “bad” contracts for Oprah and the like are either non-renewed or re-negotiated to much more favorable terms. Approx 20 million paid subs and increasing possibilities for growing base to more than just Autos and specialized equipment.Smells like money to me.
I hope you are correct but they will have to dilute the equity. The bump you get for surviving is lost by dilution.
TerryMr,
If cash is a last option then they should point that out and they shouldnt state they are possibly going to file tuesday.
They should be saying we have the cash and can pay if needed.
The other thing is we have no clue how much cash siriusXm does have because they havent released 4th quarter numbers.
If they refuse to use cash on hand to pay this 175 million and file BK im going to be one pissed off shareholder. They owe the shareholders every effort in keeping this company from filing.
I really think at this point there will be a deal made last minute (over the weekend) and everything will get settled. If you didnt know something about the Feb debt why would you worry with the Dec debt?
Yeah but usual disclosure requirements require you to state the worst possible outcome if it could happen 🙂
I think we get diluted a lot here – but by wiping out the major debt risks we’ll still be doing better than 10 cents.
Is it possible the 09 debt was restructured to secure debt in order to protect the unknown party in case of BK?
I was kind of wondering that as well.
kevin,
still doesn’t fit….. why the party would take near half of their payment in shares of common that would be worthless on Tuesday! If that were to EVR happen..Mel would be facing Jailtime along with some others. Right now is not the time to try and be “cute” on Wall Street!
I think the deals are done, and the bankers and lawyers will need some time to dot the Is and cross the Ts. The bankruptcy is in there because its the contingency option if things fall apart at the last minute.
asn610, maybe because the shares were part of a 9 mil. fee. The other 5 was in cash. This was cash they wouldnt have had and now they also are secured. I’m no expert but if I was in their shoes I would sign that deal in a heart beat if there were a possible BK in the picture. Thoughts?
I think its a “done deal”. If this is not a done deal…it would be like fixing a few flat tires on a car without a working engine. It just wouldn’t make sense to mess around with somehting that would be a moot point in bankruptcy..
Don’t count Mel out yet, The man is very very smart. Hang on a little longer and things will come around. I’m in really deep but I have always made money when Mel’s name was in the mix…still holding long …
Arent all of you who have gotten so involved in this just and being so financially sound- wishing with that little voice in you head-“just dont go belly up”
Would it matter to anyone what this stock does in the near term other then go away on Tuesday? There isnt a one of you out there who has some time table to dump this stuff in the near term because they need the cash.
Frankly, this is one of those sitations where you gotta leave it alone.If the company is still traded Wednesday then great!, if not well its one to tell your grandkids.
Good Lord have a nice weekend-The company will do what they want and as shareholders I am afraid it is out of our hands.
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 ??
Thank god that I was in Kona this week drinking heavily. This is an absolute soap opera… but painful/exciting to watch. Hope for the best…. I think there is a deal that is close to done. In my humble opinion, (and believe me it is humble), BK needs to be thrown around liberally in these negotiations to have a chance at a decent resolution with Echostar and or Liberty… no other way to even start the conversation considering that the threats probably started from the Echostar side last year. If a deal gets done, maybe we have a 30-40 cent stock. Anyone that wants more will need to be patient and wait for 12-24 months. PS. Q4 info will not be released until this is settled. Echostar needs to feel a bit uneasy about BK and Liberty both for us to have an acceptable outcome. I hope Mel gets them both involved, who knows – maybe we make it thru the valley of death. Hope so. Did Mel have the money to pay the Feb converts after Q4? Who knows, but my guess is yes indeed he did.
I can’t vouch for the legitimacy but this was found from the NY Post!!!
MALONE OFFERS BRIDGE LOAN TO SIRIUS XM
Comments: 0 Read Comments Leave a Comment By PETER LAURIA
Sirius XM CEO Mel KarmazinLast updated: 7:12 pm
February 13, 2009
Posted: 7:03 pm
February 13, 2009
John Malone’s Liberty Media is offering Sirius XM a bridge loan of several hundred million dollars to help the nearly insolvent satellite-radio company pay off debt that matures Tuesday, The Post has learned.
According to a source close to the situation, the loan is part of a two-step approach that Liberty wants to take as it looks to bail out Sirius XM, which is struggling to make its debt payment and fend off takeover maneuvers from EchoStar CEO Charlie Ergen.
As part of the plan, Liberty would provide Sirius XM CEO Mel Karmazin enough cash to replay $175 million in debt that Ergen currently holds and is due Tuesday.That then would give Liberty three months to come up with a plan to restructure Sirius XM’s roughly $600 million in debt that comes due in May and in December.
One scenario could involve Liberty borrowing from Ergen’s playbook by buying up Sirius XM debt on the open market. Another involves Liberty making a pitch directly to Sirius XM’s bondholders.
hchow….
thanks for the post…. and update… sounds like Mel got it done and we’re not looking at BK…. lets see if another outlet can follow up with a confirmation….
http://www.bloomberg.com/apps/.....RdUKc3XfCo
done deal cos; we are golden!
presentation to BOD today was the rubber stamp
as to the main stream media . . we SPIT in your general direction!
I feel his Ace is in the 4th qtr.#s, Subs were paying then.
satellite radio is here to stay and Mel has done a great job and he has private stock at 26 million shares so he does not want to bk
Liberty Media Offering Sirius XM Bridge Loan – ReportLast update: 2/13/2009 7:40:21 PM
TD Ameritrade………
Save Your Investor’s Mel……………We BUY more stock, We BUY more subscriptions…………….!!!!!!!
We have been Loyal, despite our consternations !!!!
SAVE YOUR INVESTOR’S MEL ………………….!!!!!!!!!!!!!!
I hope there is a chance to buy Tuesday mornng before there is a big pop, unless news changes again and something falls through. I want to buy another big chunk of shares as the threat fades. I didn’t have the balls this a.m. or late in the day.
First survive…to many shareholders who will sell for a few cents up…Sirius will pay off but think 2010 not 10:00 am Tuesday. Hard to fight a guy willing to cash in for his 100 bucks.
siriusbuzz is behind the curve right now….news cycle on this is hours, not days,…
so tyler’s article is already out of date.
NYPost reporting that Liberty has a bridge loan offer to pay all of the February debt.
already moved to 13 cents in afterhours with the article released only a few minutes before the closing bell for afterhours.
You’re right Shark………………..I as a ‘newcomer’ here am suprised at the paucity of commentary I’ve seen of late. I can only, and understandably, attribute this to the ‘shell-shock’ experienced by all us, but no doubt especially even so,by the Author’s of this site.
I, for one, am very thankful for the insights and updates the guys on Siriusbuzz provide for us, and the forums they provide for us to exchange ideas and give each other group therapy! So, let’s not be too critical if once in a while they are not “up to the minute.”
I think this site is wonderful and think a lot of us would have been shaken out of this investment a long time ago if it were not for their efforts and intelligence.
Thanks to all!
…. sorry for the ‘down’ moment, but I think many of us have been suffering greatly as of late, and are not at our best.
“I think this site is wonderful and think a lot of us would have been shaken out of this investment a long time ago if it were not for their efforts and intelligence.”
Not to sound negative but maybe getting out a long time ago would have been a good thing.
What do you want us to do parrot information like the rest of the internet? You just said yourself that the NYPost is “reporting”… what should we do, regurgitate that article and put [via NYP] at the bottom?
Charles. Your the only site I have bookmarked.
Charles-
There are always people who will complain. If you give them twelve, they will say “why not thirteen”; then, if you give them fifteen, they will say “why not twenty”.
Most of us appreciate you!
charles – where’s the latest & greatest ?
The sites COOL. Glad I found it and I have it book marked too!!
Inside source says..That is about all we are getting. Nobody will be sure of anything until the ink drys and we know who the players really are, if any. When the principals involved make press releases then start counting your chickens.
I enjoy this site for the articles as well as the insight from the posts.
imho
vaporgold
Good Evening Everyone!
I am announcing that there will be a large victory parade on Tuesday morning . . . try and get to the location early, around 5:00 AM. We will all drive down the street blowing our horns and yelling out the window BOOYAH!
Here is the address where we will be tail-gating:
39 HILLCREST AVE
SUMMIT, NEW JERSEY 07901
The parade is being hosted by Jim Cramer . . . that’s his home address; please be sure to stop by and say hello!
This is the first of my many gifts to Mel! More to come . . .
too funny…lol.
Here’s Jim Cramer’s house….it’s worth about $4M.
http://www.zillow.com/homedeta.....3974_zpid/
If the link doesn’t work, just type in the address.
I will be reporting more details on that later in the week. But first I want to give Jim Cramer a little time to tighten-up his editorial control and do some real reporting on this story.
No theatrics Jim. Just a straight news delivery reporting real facts. You should try it sometime Jim . . . it will set you free.
I think by 10 am tuesday we are looking at 25 cents a share and thats just the beginning (hopefully)
Note to Charlie Ergen:
Now Charlie . . . you were not very nice to our CEO Mel Karmazin in making his personal home phone number public. Imagine all of the aggravation and grief that your disrespectful act caused Mel and his family.
How would YOU like it if someone did that to YOU . . . or if someone were to stage a parade in front of your personal residence because the address was published on the internet. I bet YOU wouldn’t like it very much.
Here’s my advice Charlie . . . take your convertible bonds, go home and live to fight another day. This one ain’t worth the personal aggravation.
Surely you don’t need the same level of aggravation you exposed Mel to 4 years ago when you publicly displayed his home phone # to your TV subscribers, right?
I mean come’on, whats a $175 mil between friends? A simple public apology to Mel would also be helpful in healing these old wounds . . .
You see Charlie, Mel is an extension of the shareholders. When you disrespect Mel, you disrespect us. Obey the Honor Code Charlie.
I think I know where you are going with this one!
lol.
Mel is the man. Go Mel !!
Glad I got 10,000 more at 3:57 on Friday night.
-Mrwirez’s Super EIGHT For Saving Sirius-
These *Shows?* need the AXE-NOW !!
1-OPRAH
2-MARTHA
3-O&A (CBS VERSION-sucks + useless as teets on a bull)
4-ALL Foreign language channels.. (You are in America, M-effer’s)
5-LOCAL? Traffic and Wthr? (Bandwidth user/loser)
6-Foxxhole (SUCKS.. see #5)
7-Stern’s contract: FIVE day’s a week dude (personal pet-peeve)
8- Eff BASEBALL… Yawn + BIG $$ + Roids = S.H.I.T product
Big money people.. numbers 1,2,and 6. These people are NOT broadcasters and work THIRTY MINUTES a WEEK..
-Good Job Mel. In the years to come the *FULL SPECTRUM of BANDWIDTH* will be seen and will prove the MERGER was the right decision. Either XM or Sirius was going to fall, maybe both.
These are the “lean” years with many GROWING pains, and a HORRIBLE economy. Hang in there people… It will get much better. Personally I am going to buy $100 worth of this stock for pennies/share.
-Wirez
Disagree with MLB comment but I like baseball so I am biased. I do think the contractual obligation needs to be reworked during this tough environment.
To the Real James J. Cramer:
Hey Jim, just saw some more drive-by reporting over at your website . . you need to tighten-up the editorial control over there and stop the drive-by reporting.
You see Jim, there’s a certain pumpkin farm in Hunterdon County, NJ that is getting a pretty nice tax break for a bogus farming operation.
See Jim, it works like this. . . when someone gets a property tax subsidy for a bogus Gentlemen’s farm, your neighbors have to reach into their pockets to make up that difference … Christie Whitman tried it Jim, but then she got caught. Ya see? And I didn’t even need to work at a hedge fund to figure out that math, right? It’s called hedging your property taxes!
So, we’re pretty much done here. I think you get the message. I don’t expect this will have to go any further.
BOOYAH Jim.
Mel, this is another of my many gifts to you. As long as the mainstream media continues to misreport this story I will be sending you little gifts like this everyday . . . drip, drip, drip.
Perhaps some of the other media outlets will become more judicious in their reporting . . . we will see. Perhaps they will soon understand in a personal way how their erroneous and misleading reports effect the personal lives of shareholders . . .
GREAT POST!!!!
Not for nothing… but as much as I love my Sirius, this site and I stand by my investment… I am miffed at posting Jim Cramer’s home address. Don’t worry about Jim or any other media crap. Whether or not the media drove the PPS down is actually a good thing in a way for some of us who bought high, as we were able to average down. If you have a PERSONAL issue with Jim… write to Jim. Or use your time to write an editorial to a major newspaper. Posting someone’s personal home address is WAY OUT OF LINE. I was really digging this site until I read that post and I hope that it will soon be deleted. Jim does a lot for his community, more than you will ever know… disagree with him or not… (which I do at times) this man has a family and RoadKill… you went too far. Worry about your own investing, Jim doesn’t rule the investment world… he is just a personality. If what he said mattered you wouldn’t see so much trade activity.
Sorry… that really irked me. Tuesday should be a great day… let’s be thankful for all the info and support SiriusBuzz has given us and the 19 million plus subscribers that has kept this company alive.
whew! glad i stopped and took a breath before I sld out at .o5.
Lets hope Sirius doesn’t go and do something really stupid to drive the stock price down after the bump!