WorldSpace Files For Bankruptcy Protection
WorldSpace, Inc. (WRSP) a satellite radio service operating in countries outside the United states, has announced it, as well as all U.S. subsidiaries (which include WorldSpace Systems Corporation and AfriSpace, Inc.) have filed for reorganization under Chapter 11 bankruptcy codes. The effective date of the filing is October 16, 2008.
The Board of Directors of WorldSpace were unanimous that Chapter 11 reorganization was the best current path for the company which needs to raise capital to repay its senior secured and convertible notes. Options may include an all out sale of the company and its assets if Worldspace is unable to raise sufficient capital.
Under the bankruptcy WorldSpace will continue to operate. The holders of the Company’s existing senior secured and convertible notes have agreed to provide (with stipulations), a financing facility of up to $13 million. The financing should enable the Company to make payroll with employees needed to continue operations.
At one point Worldspace had involvement in launching XM Satellite Radio. XM also owned stock in WorldSpace a few years ago, but the investment never panned out. Worldspace had been in financial trouble for well over a year.
Thanks Demian and others.
Position – No Position WorldSpace, Long SIRI
I never did understand why someone extended a 30 million loan to Worldspace a few weeks back. I don’t think this company will ever make it even after they come out of bankruptcy. They have no subscribers and all of their satellites probably need to be replaced at this point & there are too many rules governing all the countries they are trying to cover. They should narrow their scope & try not cover the entire world, other than the U.S.
Tyler & Brandon,
Do you see any real implications here for SIRI or is this company just more or less a loser? I’m thinking that SIRI is going to get funding because I just don’t believe the US Gov’t will let it fail. That may be “pie in the sky” thinking on my part but would like to know your opinion.
You think the Gov’t cares about Sirius?!!??!!? With all due respect what planet are you from?
Hey Lynn. Love that “is this company more or less just a loser” line. Can you say .37 ??????? Hmmmmmmmmmmmmmmmmmmmmmmmmm.
Lynn,
Our govt could not care LESS about sat rad. In fact they are loaded with lobbyists that are struggling to squash it either through the FCC delay or a lack of investigations at the SEC into market manipulation. SIRI has under a 1000 employees not 100k+ like many of the manufacturers the govt continues to prop up.
I do find it funny that UAL has a similar market cap to SIRI and GM is about 3X the cap. Scary for those guys but when we compare the companies.. not so bad for SIRI considering everything that is priced in. Of all the outcomes I expect a buyout. Remember the frenzy over the FCC’s wireless spectrum auction for $19B?
Wondering if anyone on the board has estimated knowledge for the value of the combined spectrum relative to the recent auctions. Combined SIRI XM now covers the 2.320 GHZ through 2.345 GHz spectrum.
I am increasingly focused on the real value of this company with respect to takeover targeting.
Worldspace’s subs included India laborers pulling people by foot around their city on carts with a satellite radio the size of a shoe box & an antenna attached to the top of their heads.
They have no business, never will have business and are a complete disaster.
This is a stark difference from SiriusXM who will have revenue from ~ 20 million subs and will find a way to stave off any bankruptcy & eventually the company will reflect its value, although it could almost be worth nothing in market cap before it finally drives higher.
If a reverse split occurs, short selling SIRI is likely a better bet than a long play.
What a shame – Sirius/XM wants a reverse stock split. This is a total rip off to all of us who invested in this company. This stock will now have to go to $265.00 a share for me to just break even. I have been a loyal investor (sucker) in this company for four years and this is their way of rewarding me. Shame on you Mel and the entire board of directors. What you want to do to us is far worse than what the FCC did. You will not have my vote (for what that’s worth)
Just got a starmate5 and my first sub. The A la carte setup was a breeze. With a great product and content .37 is a joke for a merged company. Hopefully some financing can pull it back over a dollar. As far a a reverse split goes if it happens all the longs will never see a return. C’mon Mel get it together, and some advertising wouldnt hurt.
It has been suggested before that making ‘some’ channels free so as to reactivate all of those idle receivers. Call it a tease so as to entice them to get a full sub. At $10 a month with a year sub we are not talking the national debt. There are people who spend a lot more on cigaretts or Strabucks alone. Anyway, it could only help the bottom line if it results in reactivations and it wouldn’t cost a dime.
I found this from the Worldspace 2005 Q2 CC…
“WorldSpace had total cash and cash equivalents of $83.3 million as of June 30, 2005.
Since then, WorldSpace has raised an additional net amount of approximately $244 million through an Initial Public Offering (IPO) and an investment by XM Satellite Radio Holdings, Inc. (XM). On August 9, 2005, WorldSpace completed its initial public offering of its Class A Common Stock of 11.5 million shares, raising a total of approximately $222 million in net proceeds for WorldSpace. On July 18, 2005, WorldSpace issued to XM 1,562,500 shares of Class A Common Stock for an aggregate purchase price of $25 million. In connection with this transaction, WorldSpace entered into a global satellite radio cooperation agreement with XM pursuant to which the companies agreed to cooperate on receiver technology, terrestrial repeater technology, original equipment manufacturer (OEM) and third-party distribution relationships, content opportunities and new applications and services. In addition, Gary Parsons, the Chairman of the board of directors of XM, was elected to the WorldSpace board of directors. In connection with this transaction, WorldSpace also granted to XM a performance-based warrant to purchase 1,785,714 shares of Class A Common Stock.”
Paul,
There would be a HUGE benefit to SIRI-XM in making ’some’ channels free (so as to reactivate all of those idle receivers as a teaser so as to sell full subs).
To NOT do so is to underestimate the apathy and the laziness of millions of potential customers. If given a LITTLE taste (in concert with the influence of advertising the premium content) many would find the inspiration through curiosity (and the natural human desire for prestige) to sign up.
Its a no brainer. I hope that it gets done soon. Incidentally, Radio Shack stores are still not up to date with the new product roll out. This is discouraging to see.
I fear without diluting the stock to repay debt (if needed) and the possibility of a reverse split (if needed to avoid being delisted from the exchange) SIRIUS XM might be joining the ranks of World Space. How much $$$ will a Chapter 11 Bankruptcy re-organization get us on our common stock? I own 20,000 @ 3.00 a share and this sucks! If Mel needs these tools to possibly avoid Bankruptcy and delistment shouldn’t we be in favor of this in order to avoid BK? I do not see any other way in the current credit market unless Mel can pull a rabbit out of his hat with the Re-Fi!!!
Vaporgold…
VAPORGOLD..I got an eamil from Mike HARTLEIB…
His resonse was as follows…
Yes but it would be a Derivative, or a shareholder class action. call me at 714-927-5898 or give me a number to reach you.
I have not responded to him yet
I got this response from him. But have not replied. Maybe he should call into Thursday nights show.
To save this co. from Mel and crew.We need to get organized and get as many people to the meeting as possible call me at 714-927-5898
The mostfrustrating thing that just doesn’t want to leave my mind is that.I never associated Mel Karmazin with any 37 cent stock, maybe that why I’m in major denial.
I read these boards, and I continue to sense that most siri investors have not a clue what is going on with the world’s stock markets.
all you talk about it siri this or siri that.
never even a vague mention of the world’s stock markets.
I have said this before, but, here goes again: at this point, this is not a siri only event, practically every stock has been thrown into the trash can at this point.
siri just happened to be ahead of the curve on this one, crashing before all the others did.
Nasdaq has created a new rule to suspend the $1 pps rule until January 16th.
Mel K. and the board have to try to obtain authorization on the reverse split and the increased share authorizations, or they would be breaching their fiduciary duties to all of us shareholders.
these are authorizations, not mandates. they only authorize the events, not madate them.
they need to reverse split authorization just in case…in case they still need it at the end of next year (actually, if the Nasdaq rule change goes through, it would be early 2010), and also to show prospective lenders that they have a worst case plan to bring the stock above $1 to avoid delisting.
as to the stock authorization, they need to the increased share authorization to tell the bondholders to go fly a kite if they come up with some ridiculous proposal. otherwise, the bond holders could merely say, hey you can’t even issue enough shares to pay us off, you don’t have the share authorization. by obtaining the share authorization, it gives them negotiating leverage, even if not a lot of leverage, it gives them more than they currently have.
again, at this point this is not a siri only event, many of the causes here go beyond siri.
hopefully, the global markets recover and the lending market opens, siri gets extra cash from subscribers, and siri gets the loans necessary to pay off all the bond holders.
Shark, you are right on in your outlook. Alot of the shareholders are rightfully pissed off, but the context of where this story fits in the the big picture is not given adequate weight. If some of the more negative folks that post here spent a couple of weeks trolling the credit/capital markets looking for pat answers to the capitalization challenges of SiriusXM, they would become very aware that not having authorization for R/S & increasing outstanding shares sets up a dark scenario for the company… more power to bondholders, ect.
Shark,
You make some legitimate points but with all due respect I could care less about 99% of the other stocks out there and what the market is doing.
I have a responsibility every single day to make money to survive no matter what type of environment I am in. I have to make the right decisions because my family depends on it. I have been an investor/trader for a number of years (10+) and what happens to Sirius shares concerns me because I am invested and continued to average down until the latest RS proxy filing. Sirius’ management has the same responsibility to us.
Sure, the credit market sucks and this country has been functioning through running up debt to stay afloat but that doesn’t give the board of directors and our CEO a free pass.
Regardless of what the markets are like we need the people managing the company we are invested in to make good decisions. They make millions of dollars to do this.
I understand that hindsight is always 20/20 and that some of the decisions that were made at the top may have seemed like the best thing at the time, but to not have had the foresight to prepare for all of what’s going on now is very upsetting.
And for someone to tell me that all of this is because of the credit markets or this or that, please. It would have been nice for our CEO to have just been honest. Don’t tell people it’s “not a problem” and then have your actions show something completely different.
Just tell it like it is so the shareholders can make the right decision about owning the stock.