Sirius XM Working On February Debt
In an SEC filing today, Sirius XM Radio announced that they have agreed to issue an aggregate of 108,100,000 shares of common stock in exchange for $15,640,000 principal amount of the 2% Convertible Notes due 2009 (the “2% Notes”) beneficially owned by institutional holders. The move brings down the February debt, which was once at about $300,000,000, to $193,588,000.
The company executed these transactions to reduce debt and interest cost, increase equity, and improve the balance sheet. As before, the company stated that they may engage in additional exchanges in respect of their outstanding indebtedness if and as favorable opportunities arise.
What is interesting is the size of this pay-down. The company is pursuing refinancing, and there are a few differing holders of the debt. This is the fourth such pay-down since the merger was announced.
In addition to the debt issue, the company announced that on December 19, 2008, James Rhyu, their Senior Vice President and Chief Accounting Officer, informed Sirius XM Radio that he expects to leave the company in January 2009. The company understands that Mr. Rhyu expects to be appointed to a senior financial position at another company.
The Audit Committee of the Board of Directors has appointed Adrienne E. Calderone to serve as acting principal accounting officer. Ms. Calderone, 41, has been employed by Sirius XM since August 2006 as Senior Vice President and Controller.
Position – Long Sirius XM
Tyler…SRK..
In light of the new Moody rating and the rumours of the pre packaged BK plan, and the Chief Financial officer bailing can you contact anyone in Sirius that would tell you the truth?
SRK…
If BK was Mel’s plan all along we are toast.I hope that is not the case, and I hope Rhyu leaving is just coincedence and not his desire of not wanting to go through the carnage of a BK.
I felt pretty good this morning thinking that maybe they were able to finally start to service debt. I still hope that is the case.
Since the merger, it is hard to get a handle on Mel. Before the merger everything he said he delivered. But his remarks and actions since the merger are at times quite disturbuing.
imho
vaporgold
Vapor . . . I too kinda thought the implied threat of bankruptcy was hung-out there purely so Mel could get his way on the R/S & Dilution. Nope, duped again!
How’s this for connect the dots:
1.) Evercore brought in for consulting on debt restructure.
2.) 12/18 – Mel says in response to shareholder question that he doesn’t “think” bankruptcy will be necessary.
3.) Mel says “March 1st” for debt resolution (what?)
3.) Rhyu tenders resignation (now who knows the “books” better than this guy)
4.) 12/23 – Moodys downgrade on CREDIT DEFAULT PROBABILITY. Moodys isn’t going out on a limb on this one. They already know something we don’t.
Lets face it, they can’t default on the May debt without taking out the common . . . So that’s it Vapor. Never thought we’d be here. I’d say we are officially done.
Does anyone have any thoughts on the value of assets, namely the spectrum. Can a portion of this be sold or long-term leased to at least satisfy the May debt . . . I am assuming that we will somehow clear February although, as is usual for this company, we are only left to guess.
Roadkill.
Everything good has gone away.
Everything we never thought could happen, has taken place.
Reality has always been, what you can get at the grocery store for something.
In this pps scenario, I’m thinking one package of Top Ramon. What flavor do you like?????????
Mel is the Grinch that stole Christmas to thousands of investors.
socal . . . I like the Cup of Noodles with Shrimp (tastes like poor-man’s won-ton); just picked-up a few at $0.33 each.
Seems like only yesterday Mel was saying that the combined companies were fully funded . . . he stole more than Christmas.
This is precisely why it’s called “Death-Spiral-Financing.” There is no way out and Mel Karmazin knew that full-well when he consummated the merger at shareholder expense. Let the lawsuits begin . . .
Hey guys!!!
I have a great idea!!! Lets merge 2 companies together, then consummate the deal with ugly terms!!! Yeah!!! That will work out great!! Especially in this market, were credit is frozen.
I like the spicy ramen!!
Unsophisticated investors are like this person…..
The following is an email I received this morning:
“Tyler and Sirius……here’s what they think about you.
1.) People Tyler does not know what he’s talking about. he’s been long on this company all the way down to .13 cents. He can’t back away from his favorable position on them now because he knows it’ll make him look like a hypocrite. But I do not listen to a word this guy says.
“…improve our balance sheet”
“…employed by us…”
2.) Tyler, are you speaking as an employee or as a shareholder?
3.) Working hard? Are you kidding me? How is issuing shares and giving them away to pay off debt working hard? Next your going to tell me the FED is “working hard” dolling out money…Its not hard to hit a number on a computer screen”future work units” and transfer them to another computer screen….So did that banker “work hard” too. Tyler, let me tell you who “worked hard”. The thousands of people who go to work everyday for a company than couldnt give a rats ass about them, overbudgetted and mismanaged their way to the unemployment line at any moment…Then these people listen to people like you and Jim Cramer who are dumb, and think that it would be easy money, get in early on this great merger…Maybe I can work a little less hard, kind of like my boss…Who gets paid a fat check to decide wether I am a “viable” part of this companies future….
Those people who purchased this stock at over 2 dollars “work hard” and now they have nothing to show for it, and probably never will….Those people “worked hard”. Did you “work hard” when you were writing this article…I doubt it…
Its not hard Tyler to call you “unsophisticated investors” and ask them to do what you failed to do….Make this company work without destroying investor equity….Mission FAILED…..100 percent failure…This merger is a joke, and criminal…And one day if it comes out it was criminal, everyone on the fringe to people in the media will be questioned….This is a 3 billion dollar theft that will probably go unpunished….From the SEC to the FCC, to the media, Jim Cramer, etc….were all in working unision to convince the masses that Sirius once merged had enourmous equity value….Its called a conspiracy to committ fraud, and its a crime…So work harder, and uncover that story, not the bs your write…
These are some of the messages people left on your Sirius board…There are more but this is enough. Tyler your a fucking idiot. A stupid piece of shit who does not know what the fuck he’s talking about. I hope you fucking die on Christmas morning you stupid bitch.”
Here is my response:
“The latest article was virtually word for word from the SEC filing. I took out Sirius’ first person language such as “ours” and replaced it with “theirs”, etc. I missed one such word. Leave it to unsophisticated assholes to not be able to figure that out. The world is full of idiots, and these posts demonstrate that rather well.
Do I wish them to die on Christmas? Nope. Only an asshole would do that.”
Given this latest, it is no surprise why some people do call many investors in this equity “unsophisticated”. I rest my case.
Tyler..
Some e- mails should just be deleted and that was one of them.
A lot of us here appreciate the job you do and the articles you post.
All of us vent from time to time, but the person who wrote that should get some help.
Have a Merry Xmas Tyler
vaporgold
I have accumulated a big position in the company over the past 2 years, and the loss is over 1 mil in my particular situation. A couple of thoughts regarding potential bankruptcy for SIRI…. I still to this day feel that they can avoid it, and probably will. Making the rounds to several bankruptcy firms may actually help with ongoing efforts to restructure debt & I am sure that they are exploring the option. In this paticular set of circumstances, the common share holder may not be wiped out. Common shareholders have rights in chapter 11 that are not often taken advantage of. We can all have a voice in reorg if it comes to that, and the BK laws do NOT shield the management from the equity holders the way they do with creditors. There is plenty of case law to back this up. You guys should go to info@turnaround.org and look up the article written in August by Andrea Schwartz of Fulbright & Jaworski. I am not a Mel hater or conspiracy theorist in any way, but I will plan on getting involved with the reorg if it comes and you guys should do the same. Throwing the common shareholders under the bus and starting fresh with less debt and more equity for senior management might have been workable in times past, but at this time, in this situation, it will not fly. No way
Krypto1 . . . thanks for the post. I will check out that article by Andrea Schwartz. Regardless of the differing opinions of how we got here . . . all should agree that it is now prudent to conduct the necessary due diligence to protect our remaining positions. Your post is a great start . . . lets build on it.
1 more thing . . Krypto, do you have any feeling on the value of assets such as unencumbered spectrum that could be front-load leased or out-right sold to satisfy creditors and how would the FCC play into this, particularly under a bankruptcy scenario?
Is there anything to be learned from treatment of the WorldSpace filing:
http://www.kccllc.net/WorldSpace
Sirius Xm need ` $194 million? If Howard Stern wasn’t a greedy sob, he would buy $195 million in Sirius stock and still have $305 million left over. Honestly, how much money does 1 guy need!
What makes you think that’s not in the works. The only thing left to pump Howie’s inflated ego, now that he can use all the foul language he pleases on sat. radio, would be to own the damn company. Just a thought.
SRK..SCRF…GIS.. Friggin..Cos..SteveSirius..Syni..SXMI.. Newman and the rest of the round table
Before I forget, Merry Xmas to all of you.
I am not so sure that a BK is planned. The reason I say that is the amount of COH, and the amount of stock that was sold.
It really looked like to me they were selling enough to be able to service the Feb note along with the COH, and they would still have enough for operating expenses.
Why would they try to service any part of that debt now if they were planning on BK?
If it was me and I was going to file BK, I wouldn’t pay any debt.
Something seems amiss to me. Maybe I am wrong but we should know pretty soon as this would be news that cannot be contained for very long.
imho
vaporgold
Vapor . . . the Feb debt is bondholders so I believe they get paid no matter what. I am guessing that the greater risk of real default will be with the May debt . . . and that is where the prepackaging comes in.
Again, I don’t think Moody’s comes out with the downgrade unless they have a slam-dunk. Also, the “March 1st” date for a restructuring plan tells us that the Feb debt is not part of that plan. My guess is that Feb will bring new converts (continuing the death-spiral). Wish I could be more optimistic but check-out this excerpt from CNBC, August 1, 2008:
Faber: ON THE POINT OF MONEY, ARE YOU DONE? ARE YOU FULLY FINANCED AT THIS POINT AT SIRIUS XM?
Karmazin: YEAH. ANY LIQUIDITY QUESTION THAT HAD EXISTED ON THE INDIVIDUAL COMPANIES, OBVIOUSLY, ARE NOW PUT TO REST.AND ON THE COMBINED COMPANY, YOU KNOW, WE HAVE A FULLY FUNDED PLAN. YOU KNOW, WE HAVE SOME CONVERTS THAT COME DUE IN 2009, AND WE’RE OPTIMISTIC THAT ON THE SIRIUS SIDE, THAT INVESTORS WILL START TO SEE THE VALUE OF THIS COMBINATION AND WE’LL PRICE THROUGH. IT AND IF FOR ANY REASON WE DON’T, YOU KNOW, WE’LL JUST ROLL THOSE OVER SOME TIME IN 2009 OR FINANCE IT WITH SOMETHING THAT MIGHT BE MORE ATTRACTIVE. BUT YEAH, YOU KNOW, WE FEEL REALLY GOOD ABOUT OUR LIQUIDITY.
I remember watching that on CNBC, now I feel like the e-trade baby throwing up all over my keyboard.
dread . . . good one! lmao!!
My guess is that the remaining Feb converts will be taken out with cash. I truly believe that Mel will surprise the naysayers and the stock will claw itself back to a respectable level. Remember, once the 2009 debt is dealt with, the company has no more issues for several years on the debt side.
Merry Xmas vapor!!
SRK…Krypto1…SCRF..
The statements Mel has made since the merger at this point in time leaves stockholders with a lot of doubt.Rhyu bailing does not look good, the Moody report does not look good.Maybe you guys are right.
It was just the last thing I wanted to see, and I got up yesterday morning feeling good that maybe they were starting to service debt, what a turn around day!!
Kryptol…
The information is well worth reading at info turnaround.The vote on the RS, share issue and CEO and directors was like 75% to 25%.
I wonder if that percentage would change?
I will catch up to guys in the next article Tyler printed regarding Moody’s
vaporgold
To all the numbnuts that said BK wasn’t a possibility, nice going. You’re looking like genius’. Thanks for all the pump.