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
Are these shares expired options NFL NASCAR etc.. with no dilution?
Here we go with the added dilution. Nice job folks. Kiss the share price further down.
It is interesting that the dollar amount is relatively small (as big company amounts go). Perhaps there was a need to bring the February debt under the amount of $200 million with the idea that financing can be more easily obtained for a total of less than $200 million? Or, maybe Sirius XM is just hacking away at the debt number in amounts they are currently able to raise in the hope of reducing it to a more manageable amount.
Anyone got any ideas on this?
Another idea that just occurred to me: Perhaps they are intentionally issuing stock in bits so as not to create more of a dilution problem in the market by issuing a huge amount of stock all at once?
The dilution has happenned already except for maybe another 3 or 4 cents. It’s at 12 cents and I love the way they state that they may continue to make similar move when favorable opportunities arise. How the hell is this favorable. Why did they not sell a billion shares at 1.00 or .50 to raise the capital. Now they have to sell 3 billion sares at .10 just to raise 300M more and still need a 500M loan at the end of the year.
Or maybe pay the FEB debt with cash. That would be a nice signal. I think Tyler stated at one time, several weeks ago, that they had over $300m.
Perhaps SIRI will pay some or all of the February debt with cash, but wants to send the signal to the Street and potential investors that it can also raise money from others if the need arises.
My only problem with working on the debt in this way is that the company could pay of the Feb. debt in cash, make the announcment, watch the stock price jump.
Once the stock price jumps, THEN sell your shares to either pay off the future 2009 debt, or to restock your cash reserves. Both plays are exactly the same, except you do not dilute as much if you pay first THEN dilute.
I just do not understand it.
If they used all their cash to pay off the Feb. debt, it might be looked at as them being desperate because they were out of money. I guess there is no easy way.
What I mean is, after using the cash, they would be out of money, and mibht be desperate to get another loan
Steve, I agree. No cash on hand would make them desperate.
I prefer to see them in control. This also coincides with Mels statement “we will (or would like) to handle the debt sooner than later” and “we will take care of the debt as opportunities present themselves” Spot on.
I also think it looks better to whittle away rather than become indebted to someone in a large chunk possibly putting power in the wrong hands. Spread the wealth sounds good to me.
It also gives a good feeling to blast those articles that keep coming out saying there is 300 million due in February. Sneakily pay it off and make the uninformed look, well, uninformed.
Go Mel, do your thing, make money, make money…
Sirius XM rules.
The fact they are paying off their debt is a good thing. It might cause some dilution but share prices arent going to take a hit because of that. They already have.
They cant just jump in and pay the feb debt off even though they have the cash to do it.
They have to maintain cash for operations and anything that might jump out that is unexpected.
They are in good shape though on the Feb debt and now the next big hurdle is the may debt.
If they can get past that i think investors will start to see that they are going to make it and shares start to revive. They have 0 debt to pay in 2010 so that will give them a year to catch their breath again after a rough year of debt payments in 2009. The next big debt hurdle wont be until 2014.
We just need to see sirius continue to chip away at this debt and every little bit they chip away is a little hope the ship wont go under.
I agree with Steve Sirius that the amount is interesting.
I would guess that with the cash on hand, and what they are seeing as far as current sales, they may feel confident in paying off the balance with cash and still have enough to operate.
I also hate any dilution but if they pay off the balance with cash it is certainly better then issuing more shares.
It will be interesting to see how they handle the balance of the Feb note.
imho
vaporgold
One other thought is that Mel said that he wanted the new loans in place by March 1st.
Sirius may servive the Feb note by themselves and have Evercore and JP Morgan get the loans for May and Dec handled.
That would give them pretty clear sailing until 2011.
imho
vaporgold
When exactly is this stock going to bottom out? Seriously, how much lower can this go? Is there anything else that is not already priced into the stock? The value of the stock, to me, even takes into account bankruptcy.
So, does the risk vs. reward finally make this stock compelling to buy? Doubling my shares to 30,000 for about $2000 is starting to get real tempting.
IMO..the pps will hold in low teens until financing is announced and no lower than .10 should not go into single digits.
I am buying at least 1000 shares a week now at bargain prices .12 to .14. Presently averaged down to .8035 for 14000 shares. Hope to get it averaged to .75 which the stock pps should reach in next few months.
GOOD LUCK to all and have a happy holiday and prosperous $$$ new year.
At some point in time they have to stop borrowing and diluting to pay off borrowed money.That does not excite the street at all.
I hope they do service part of Feb with cash that they have generated. That will show the street that they are capable of genertaing large sums of cash to service debt.It will also show that the cash flow is ample enough now to support the company’s month to month operations.This would be a great sign and show some difinite progress.Something all the stockholders and street would be encouraged by.
As far as the share price, with the way this stock is manipulated it is anyone’s guess. Even at .11 cents a share the big boys,Hedgies,and shorts are still having a field day.
I just wish Mel would put some real pressure on the SEC to look into some of the trades.
One day companies will probably have to have their investigation staff to monitor their own stock trades to protect it from being naked shorted and manipulated with late trades etc.The SEC does seem capable of the job.
imho
vaporgold
The SEC is tied up right now defending why they never saw Madoff’s pirate ship docked on their doorstep! When the bad times roll in and the water level lowers you see the sludge at the bottom of the pool. It will take awhile to clean this up before people trust Wallstreet again.
Im finally selling so I can write of my losses on my taxes. I will be so glad to have this piece of shit stock gone. Its amazing with the content offered that the stock price is what it is. If theres anything Ive learned Its how corrupt the markets are. Between wienkes, cramer and mel fuck them all. Good luck to all, Im sure once I sell there will be some kind of pop, but fuck it.
Tyler . . . wondering if you could investigate the recent rumor that Sirius XM has already drafted a prepackaged bankruptcy plan and is just waiting to file.
This would not be inconsistent with Mel’s refusal to rule-out bankruptcy during the Shareholder’s meeting on the 18th (said he didn’t “think” it would be necessary).
Vapor . . . if this is true, it won’t matter what price we average down to; We are toast.
Would appreciate if SiriusBuzz could try and further the story or obtain official comment from management.
I think they are looking at generating enough cash from liftime subscriptions recently promoted to equal the amount of debt due come February. That is why the the size of this last pay-down is interesting. It makes me think they have reached their goal without having to dip into their cash reserves at all. Meaning they still have $300 million available going forward. JP Morgan and Evercore will work with them on the remaining debt due.
Charles . . . I apologize in advance for the following article post (I do not have the link). The article is critical to this discussion and connects with my earlier post of a rumored “prepackaged bankruptcy.”
From Marketwatch December 23:
SAN FRANCISCO (MarketWatch) — Moody’s Investors Service said Tuesday it downgraded the probability of default rating and the corporate family rating of Sirius XM Radio Inc. to Ca from Caa1 because of debt coming due in the new year and liquidity problems. The rating outlook is negative. “With nearly $1.0 billion of its $3.3 billion total debt coming due in the New Year ($190 million in February, $350 million in May and $433 million in December), and given the current background of capital market dislocation and the company’s poor liquidity situation, the rating actions anticipate that Sirius will be unable to repay or refinance its maturing debts without negotiating some sort of compromise arrangement with at least a portion of the affected constituents,” Moody’s said in a statement.
Just clearing out the problematic debt holders for the reorg. Less cooks in the kitchen, makes the cooking much easier… Watch for your pal Mel to walk a away with a big slice of ownership in the new near debt free entity. There was always more money in it for Mel to BK it and take ownership debt free than trying to turn the ship around. He used the “unsophisticated” shareholders allowing them to sell their own integrity down the crapper in opining the FCC (using various aliases I might add) to allow the merger. One completed, then Mel simply threw the shareholder overboard in deep water and then run the ship aground.
Now the shareholders got exactly what they have owed to them. No real al la carte, and less programing for the same money. Now, that’s a price increase. Just remember, sometimes you get what you ask for.
And so it goes,
PCSTEL
Considering how much I am frustrated with the SP right now I want to agree with you, however, I don’t think this company can turn around if they declare BK.. Just like GM, nobody will want to buy a product that has announced BK. Would you buy proprietary equipment that could be worthless if the company had potential of closing down? Although their talent must be discouraged right now who would want to sign up with a company in bankruptcy. Their subscriptions would get decimated! I think the UAL chapter 11 was the exception where you buy a single use ticket and this was probably done by those who expected to travel in the near term.
rumor is that a “prepackaged bankruptcy” plan is done and awaiting filing . . subscribers would barely be aware of it. Shareholders would take it square on the chin.
Mel and Leon Black would skip off into the sunset with our money and a viable, debt-free, company with a growing subscriber base. That is the plan.
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 [email protected] 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.