Sirius Weekly Thread 11-9-2009

UPDATE 1-Liberty Media sees Sirius stake spin in future
Thu Nov 12, 2009 4:22pm EST

NEW YORK, Nov 12 (Reuters) - Liberty Media Corp (LINTA.O) expects that it will spin out its 40 percent stake in satellite radio operator Sirius XM (SIRI.O) "at some stage", Liberty CEO Greg Maffei said on Thursday.

Liberty, the media conglomerate owned by media mogul John Malone, made an opportunistic acquisition of the stake in Sirius in February when the satellite company was on the verge of bankruptcy.

Maffei, who was speaking at the Media & Money conference in New York, said the Sirius investment had been one of the best bets the company had ever made.

Liberty Media paid $530 million in loans with a high 15 percent interest rate in exchange for preferred stock convertible into a 40 percent stake in the company. Today the stake is now worth more than $1 billion.

"It will be logical to spin out the stake at some stage," Maffei said.

Liberty Media has traditionally avoided transactions that could lead to it incurring taxes on top of a deal price. One option would be to spin-out the stake directly to shareholders of its Liberty Capital (LCAPA.O) tracking stock through which it made the Sirius investment.

(Reporting by Yinka Adegoke; Editing Bernard Orr)

the above post requires some more study as to whether or not the "Investment Agreement" can be assigned to the counter-party in the spin-off and what rights if any survive as relates to the "Shareholder Rights Plan/Poison Pill" (Mel hates when I call it that) . . but it is a poison pill

anybody?

we need due diligence on this pronto . . .

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Originally Posted by Sirius Roadkill

UPDATE 1-Liberty Media sees Sirius stake spin in future
Thu Nov 12, 2009 4:22pm EST

NEW YORK, Nov 12 (Reuters) - Liberty Media Corp (LINTA.O) expects that it will spin out its 40 percent stake in satellite radio operator Sirius XM (SIRI.O) "at some stage", Liberty CEO Greg Maffei said on Thursday.

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I'm just not sure what to make of this.. THoughts?

It's a complicated situation, but it is pretty much a shareholder agreement, spinning off another company simply for the shareholders. Liberty did it with another company as well, but the specifics escape me now. In a nutshell, it's not a big deal for the shareholders, but the fact they are going this direction leads me to believe they are serious in the investment. That's why I think they could possibly buy out Siri eventually, but I believe they still have to wait 2 years ..

Hopefully someone more knowledgeable than me will be able to provide further insight.

Unless Liberty buys the remaining Sirius shares -- it will not impact Sirius shareholders at all, unless they do a much more complicated deal.

The difference is it's not a spin-off, but rather a split-off. The former is a distribution, while the latter is an exchange... usually done on a tax-free basis.

A classic example of this is what Liberty Media is doing right now with DTV.... the Liberty holds a majority stake in DTV -- and now they are doing a split-off. So what they are doing is creating a new company called the DirecTV Group... where all shareholders of the current DTV will get 1 share of the new company, in exchange for each 1 share they currently hold of the old company; while at the same time, Liberty Entertainment shareholders will receive 1.1111 shares of the new company, in exchange for each 1 share they hold of the Liberty Entertainment tracking stock. Thus the company splits-off from Liberty Media.

Liberty Media will redeem 90% of the Liberty Entertainment tracking stock, in exchange for 100% of the stock a new company called LEI -- which will then merge with DTV forming the new DirecTV Group.

DirecTV Group would then be a seperate company from Liberty -- wholly owned by its shareholders. But if I recall correctly, Liberty will still have a minority stake in the new company via their own stock in their own shares.


It's complicated -- and don't think of it as a buyout or a spin off. It's a split off -- or an exchange... which may or may not involve Sirius shareholders at the time.

Regardless, it won't be happening any time soon.

Thank you .. yeah, DTV is what I was thinking of. Pretty much the same deal, but very complicated and really not impactful for Sirius shareholders.

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Originally Posted by mrmertz

For what it's worth, I'm still here!

The others pop in and out occassionally and make 'special guest appearances'. Haven't had a weather report from Julie in God knows how long. Must be busy with the 'frig or somethin'.

Good news with the upgrade! We'll see how we open. Pre-market looks up so far. If only this damn stock could find support each time in a higher range and stay there. And yet another satellite launch. You have to wonder why a company that is supposedly doomed to go belly-up in the future would keep investing moolah in space shots. It just doesn't compute.

Anyhoo...yes, the place here is like a ghost town. But I look for it to pick up especially if we get more upgrades and move in closer to Q4. If we can manage to start to nestle up towards the dollar range by then this place will be buzzin'.

Cheers
Jeff in AZ aka mrmertz

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Hi Jeff in AZ aka mrm.:) I am still around. Not busy with the frig,
although maybe that wouldn't be a bad idea. Of course if I cleaned
it mom wouldn't have anything to do while she is visiting. I wouldn't
want to deprive her of that pleasure. :D
I was running out of ways to report the weather There are only so many
ways I can say cloudy, dreary and ugly out. :rolleyes: Although today
was a beautiful sunny 60.

Hope all is well :)

Julie

Julie you are so bad! Deprive your mom of cleaning :rolleyes:!

It is a wonderful 3 celcius and feels like -1! Winter is HERE :clap: We have snow in the forecast for next week!!! :D I don't think I could be any happier!!!

http://blogs.barrons.com/techtraderd...k-to-positive/

When is the 50 to 1 reverse split being executed? The day after the split the stock will fall 40% and shares will be on sale for real. I will start a new position then, until then....its dead money. Good luck this week. Anyone looking for quick swing trade give FXP or FAZ a look. These stocks short the China and the banks...they are also near the bottom of their ranges.

Big Ben