Any comments on the new S-3ASR filing?
Automatic Shelf Registration Statement Of Securities Of Well-Known Seasoned Issuers
http://investor.sirius.com/sec.cfm?D...panyCIK=908937
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Any comments on the new S-3ASR filing?
Automatic Shelf Registration Statement Of Securities Of Well-Known Seasoned Issuers
http://investor.sirius.com/sec.cfm?D...panyCIK=908937
I just read that myself. The prospectus refers to every avenue a company can possibly take to raise capital. Get ready for dilution folks! Personally, I can't wait to get this over with and we can finally start focusing on the company's fundamentals.
put a 20 multiple on $300M in earnings next year and we got a multibagger from here, even with share dilution.
Regarding "shelf registrations" - my understanding of shelf registrations is that companies do them so that if and when they want to issue securities they are not delayed by the need to have the Securities and Exchange Commission do a lengthy review their offerings before the company can sell stock. The company will have their lawyers submit their offering documents to the SEC, and then the SEC may comment and ask the company to modify certain language in their offering documents and/or clarify certain wording. This can take some time. Therefore, when a company does a "shelf" registration, it gets all the back and forth stuff done with the SEC before the company intends to offer securities to the public. The company does NOT have to go through with offering the securities just because they do a shelf registration.
So, it makes perfect sense that Sirius XM would do a shelf registration at this time, having just obtained shareholder approval for issuing more shares of stock if and when the company thinks it is in their best interest to do so. Again, Sirius XM need never finalize this shelf offering. They are just getting their ducks in order, so to speak. I, for one, am happy they are acting proactively to have the foresight to look at their need for funding from many angles.
Everyone have a Happy New Year!
They have nearly $1 billion that needs to be refinanced in the next 12 months - to do so they have to have certain amounts registered and ready to go. The shelf registration is for equity AND/OR debt... so there is no guarantee that there will be equity dilution.
I'm not suggesting that there won't be, just stating that there is no guarantee that this shelf will all be via equity. All that is known is that they are registering an "indeterminate" amount that is to be issued via debt, equity, preferred shares, Depositary Shares, warrants and/or combinations of such. And given that Sirius and XM have to refinance nearly $1 billion, IMHO this filing was necessary -- because I don't see them refinancing all of it via Rule 144A private placements -- so they have to have various instruments registered and ready to go.
Let me also point out that Sirius' previous Shelf registration was for $500 million and issued in August 2005; it expired on 12/1/2008 unused. Which means Sirius had no Shelf ready to go... this filing was necessary.
Seeing this, I expect to see movement on refinancing soon... and I note that they are not registering a specific amount, but rather an "indeterminate" amount, to be used from "time to time". I bet we see new equity, mixed in with new "preferred shares" and/or "warrants" issued to new "investors"... and perhaps some replacement debt. The key to remember is that this is going to refinancing of current debt.
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One thing to add.
The debt is now down to about $880 million if I am not mistaken. The Feb has had a few paydowns, and is now at $193 million or so.
I have been using the $1 Billion number as well, and although $880 million is close to $1 billion, the $120 million is a nice piece of change that many, inclusive of myself, have been overlooking.
Feb down to 193M (conv notes)
May is 250M (revolving credit facility) + 100M (UBS term Loan)= 350M
Sept = 2M (conv notes)
Dec is 400M (conv notes) + 33M (sec conv notes) = 433M
Still 978M left.
543M is due by May & with the use of different debt for equity swaps & use of some cash on hand, they should be able to get past this point. But if they could only do that and then maybe by next October get a reasonable term loan for the last 400M.
What I am trying to understand is how you sell shares or do these debt for equity swaps when the stock price can't get above .12 cents. At least at .25 cents you could raise 250M by selling 1 billion shares, but do the math on .12.
How could they prop up the stock to do this ?
976 million is what I had come up with.....where are you getting the info about the 2m in Sept.?
- Sirius’ $193 million 2.5% convertible, maturing on February 15, 2009.
- XM’s $250 million revolver, maturing on May 5, 2009
- XM’s $100 million term loan, maturing on May 5, 2009
- XM’s $400 million 10% convertible notes, maturing on December 1, 2009
- XM’s $33 million convertible discount notes, maturing on December 31, 2009
Look at the Dec 18th- 8k from shareholder meeting, where they break all this down.
You are right, I had forgot about that one - probably because it was the smallest one. When was that loan taken out and why for such a small amount? Do you know?
If I'm not mistaken, that was from the previous refinancing of 2002/2003 -- when Sirius swapped all of their debt (well most of it) for equity. This was what remained.Quote:
Originally Posted by Demian
Also, sxminvestor, keep in mind that the $350 million due in May are not Bonds -- they are a term loan and a credit facility. It is far more easier to extend the expiration on these (with updated terms/rates), than it is to refinance it. While investment banks may be unwilling to issue junk bonds right now; and other banks unwilling to loan cash -- they do need to make money on their current loans. And since extending the expiration of the loans won't require any new funds to be issued, just an agreed upon change to the terms... I am not really concerned about these amounts.
Nor am I concerned about the remaining amounts due in February -- as Sirius has themselves in a position to pay it down with cash, equity swaps and perhaps a small $100 million term loan of their own, as they are not as levered as XM.
The September amount will be taken out with cash, easily; and the $33 million at the end of next December are bonds that Honda owns -- I don't see them pushing the company into default, given the amounts of cash that they get from XM... those will be reworked, if not repurchased by XM.
My only concern is the $400 million that mature in December next year.
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Homer,Quote:
Originally Posted by homer985
Thanks again for all of your input...
I agree that the Dec. '09 $400 million is the biggest hurdle, but thankfully it is the furthest one out and SIRI's balance sheet and the credit market should be in a much better position by then.
You say that the $400 comes due in "mid December" - where are you getting this from and do you have an exact date? According to the ML report I have, it is Dec. 1st, '09...
It is December 1... I had fixed that and made a couple other changes right after I posted it... but you obviously saw the original post, before I made the change.
Homer,
If the May $250M & $100M bank loans decide to change terms COULD this put them further down the pecking order IF BK would happen? I also figured this was the easiest to extend but why was it not extended months ago as this would have increased the stock price and allowed us to exchange debt for equity on Feb 09's at a higher stock price????
Good question... My guess is that Mel thought he could get better terms by waiting for the economy and credit markets to improve, for the company's balance sheet to be better after Q4 '08 and Q1 '09, and also I think he wants to tackle it all in one swoop. I think the plan is to have the balance sheet and the stock price strong enough for the Dec. '09 debt - which is the most challenging piece of the debt puzzle. The stock would probably respond better to good news in a better economic and credit environment and I don't think he wanted to shoot his wad to soon and at the wrong time - so to speak. In hindsight, he might have done something different, but he probably had no idea that things could get as bad as they did - a lot of people didn't...including me. Things change....Quote:
Originally Posted by LIBOR/TED SPREAD
Homer - While you feel the May term loans can be reworked, wouldn't they be at a much higher interest rate , maybe in the 25% range, which could be too burdensome to the company ? I'd take 25% over default, but I'm concerned that it has not already been handled.
Now they may want to erase the Feb 1st. If they could knock down the Feb debt to 100M from 193M with stock sale, debt swaps, etc, then I think it could make sense to pay the the balance of 100M with cash on hand.
Then if you are correct and term loans can be pushed out 1 or 2 years, I think they could pull off December when they are in a much better operating position, especially 4th Q of '09 most likely being a cash flow positive Q. The question is, if they use 100M cash for Feb debt, is ~ 300M enough to fund operations until Q4'09 ?
I think they had over 400M going into this quarter and look like they may burn 32M, I think I read that somewhere from the Dec 18th shareholder meeting.
The big question is, could they potentially get worse in 1Q for financials. I'm concerned the bottom is in the 1Q and then will begin to improve in 2nd half, but we need these deals done by March 1st.Quote:
Originally Posted by Demian
I so much want to believe this will turn out positive and buy about $10,000 worth of stock at this price so I can get some of my massive losses back one day, but I'm so afraid to lose more.
I have been thinking about this a little more....I think Mel's plan for Dec. '09 is to go to several Pawn Americas and get payday loans and cash advances. It's all going to be ok...
25% seems quite a bit excessive. This is from the last XM 10-Q:
~~~~~~~~~~~~~~~~~~~~Quote:
For the $100 million Term Loan...
"The interest rate is reset quarterly to 225 basis points over the 9-month LIBOR." -- The last rate was set at 5.5625%.
For the $250 million credit facility...
"The interest rate is LIBOR plus 150 to 225 basis points or an alternate base rate, to be the higher of the JPMorgan Chase prime rate and the Federal Funds rate plus 50 basis points, in each case plus 50 to 125 basis points." For $187,500 of the drawn amount, interest as of September 30, 2008 was 4.75%; and for $62,500 of the drawn amount, interest as of September 30, 2008 was 5.25%
Current 9-month LIBOR is nearing 4-year lows -- down at 1.9% as of yesterday. The facility was added and borrowed against when the rate was much higher as well as the term loan.
You really think that the banks would force XM into a rate of LIBOR plus 2,200 basis points?!?!?!? That's pretty excessive, don't you think? A situation like XM could call for LIBOR plus 1,000 basis points as an extreme... which would put the interest rate near 12-13%. But not too much above that, IMHO. Remember, Term Loans (and in this case the facility) generally command lower interest rates than Bonds -- as they are short term borrowings.
With the Fed and Central Banks cutting rates so much -- XM's current terms put the rate on the Term Loan at around 4.2% and on the facility at around 4.25%. By far the lowest rates that XM is paying on any of its borrowings.
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Demian, one of the benefits of the down economy are low LIBOR rates -- with Mel waiting and the rates dropping, he has the ability to negotiate better terms, IMHO.
Homer,
Could the bank the holds the $250M & $100M loans be nervous to change terms in fear of falling down the "pecking" order in BK court IF company would default or file BK? Would it behoov the bank to change terms and attach themselves to both SIRI & XM vs just XM? I really don't understand parent vs subsidery debt???? Any info here is appreciated?