I am putting my prediction out now . . the notes will be placed at 7.25%Quote:
Originally Posted by SiriuslyLong
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I am putting my prediction out now . . the notes will be placed at 7.25%Quote:
Originally Posted by SiriuslyLong
I agree, this is the kind of news I want to hear, but I'd also like to understand the net effect.Quote:
Originally Posted by Havakasha
There is a cost to it for sure, but there are 2 keys. One is the that the notes being retired are at 11.25% which is a horrible rate. As we know, with rates sooooo low today, SIRI will get a much better deal. Secondly, it's a 5 year extension. 5 years to grow and generate cash.
Can anyone recreate what Homer posted here a while back. Boy do I miss him.
http://siriusbuzz.com/forum/showthread.php?t=1348
The news just continues to get better! Next S & P!!! :):cool::cool:
New York, October 13, 2010 -- Moody's Investors Service upgraded the Corporate Family Rating (CFR) for Sirius XM Radio Inc. ("Sirius XM") to B3 from Caa1, its Probability-of-Default Rating (PDR) to B2 from B3, and the ratings for individual instruments, including those for its wholly-owned subsidiary, XM Satellite Radio Inc. ("XM Radio"), as outlined below. Moody's also assigned a B3, LGD4 - 65% rating to the proposed $550 million offering of senior unsecured notes due 2018 to be issued by XM Radio. The speculative grade Liquidity Rating remains unchanged at SGL-2 and the rating outlook is stable. Net proceeds from the proposed debt issuance will be used to tender for XM Radio's 11.25% senior secured notes due 2013 and pay related fees and expenses. The planned repayment of the 11.25% senior secured notes would reduce 2013 maturities to approximately $780 million, resulting in enhanced financial flexibility not only through the maturity extension but also through the reduction (and elimination of most) of the company's secured debt.
Assignments:
..Issuer: XM Satellite Radio Inc.
....NEW $550 million Senior Unsecured Notes due 2018, Assigned a B3, LGD4 - 65%
Upgrades:
..Issuer: Sirius XM Radio Inc.
....Corporate Family Rating, Upgraded to B3 from Caa1
....Probability of Default Rating, Upgraded to B2 from B3
....9.75% Senior Secured Notes due 2015, Upgraded to Ba3, LGD2 - 12% from B1, LGD2 - 22%
....8.75% Senior Unsecured Notes due 2015, Upgraded to B3, LGD4 - 65% from Caa1, LGD5 - 73%
..Issuer: XM Satellite Radio Inc.
....11.25% Senior Secured Notes due 2013, Upgraded to Ba3, LGD2 - 12% from B2, LGD3 - 32%
....13% Senior Unsecured Notes due 2013, Upgraded to B3, LGD4 - 65% from Caa2, LGD5 - 76%
....9.75% Senior Unsecured Notes due 2014, Upgraded to B3, LGD4 - 65% from Caa2, LGD5 - 76% (to be withdrawn)
Unchanged:
..Issuer: Sirius XM Radio Inc.
....Speculative Grade Liquidity Rating, SGL-2
RATINGS RATIONALE
The upgrade of Sirius XM's CFR to B3 reflects our view that EBITDA (incorporating Moody's standard adjustments) less capital spending to interest expense will grow and comfortably exceed 1x in 2011, reflecting higher than anticipated subscribers and revenue and reduced debt service and programming costs. As announced on October 1, 2010, the company expects to add more than 1.3 million subscribers in FY2010, bringing the year end total to 20.1 million and exceeding prior expectations. Despite high churn in the subscriber base, vulnerability to cyclical consumer spending, and increasing wireless competition, we believe subscriptions will grow through the end of 2011 as the economy and automotive sales recover. Heightened capital spending related to the ongoing construction and launch of two satellites will likely limit free cash flow generation in 2011. The rating also reflects the company's sizable debt burden as well as the need to invest significantly in programming, marketing, launching new services, and maintaining a satellite fleet to attract subscribers in addition to delivering content.
The stable rating outlook reflects our expectation that annual sales of new automobiles will increase over the near term and credit metrics will improve as the company reduces debt balances with free cash flow. Given that Sirius XM equipment is installed in greater than 50% of new automobiles being sold in the U.S., more new vehicles enhances the potential subscriber base. Moody's research provides a base case forecast for the sales volume of light vehicles in the U.S. indicating an estimated 13.5 million units to be sold in 2011 compared to 11.5 million units estimated for 2010.
A growing subscriber base, improving EBITDA margins, and sustained lower leverage could result in an upgrade. Sirius XM would also need to maintain sufficient liquidity to be upgraded. Ratings could be downgraded if subscriber losses, functional problems with satellite operations, or unplanned capital investments reduce free cash flow below expected levels. A weakening of the liquidity position including an inability to access capital markets or generate sufficient cash flow to proactively address 2013-2014 debt maturities could lead to downward rating pressure.
Liberty Media Corporation holds preferred stock that is convertible into approximately 40% of common shares of Sirius XM as a result of $530 million in loan commitments made in 2009 which were subsequently repaid. Liberty Media Corporation is not likely to increase its ownership prior to March 2012, the third anniversary of the preferred stock transaction, due to internal revenue code rules governing ownership changes and NOL's. As of June 30, 2010, Liberty also owned an aggregate $374 million of notes (face value) issued by Sirius XM and XM Radio across several issues.
We expect to withdraw ratings on the 11.25% senior secured notes after they are fully tendered or redeemed, and, consistent with Moody's practice, we will withdraw ratings on the stub 9.75% senior unsecured notes due 2014 based on their de minimis amount.
For additional information on Sirius XM's ratings, please see the credit opinion on www.moodys.com.
The last rating action was on February 1, 2010, when Sirius XM's CFR was upgraded to Caa1 from Ca and its PDR was upgraded to B3 from Caa3.
Sirius XM's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Sirius XM's core industry and believes Sirius XM's ratings are comparable to those of other issuers with similar credit risk.
The principal methodologies used in rating Sirius XM Radio Inc were Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.
Sirius XM Radio Inc. is headquartered in New York, New York and provides satellite radio services in the United States and Canada. The company offers a programming lineup of more than 130 channels of commercial-free music, sports, news, talk, entertainment, and traffic and weather. Sirius XM also provides music channels that offer music genres, ranging from rock, pop and hip-hop to country, dance, jazz, Latin, and classical; channels of sports; talk and entertainment channels; comedy channels; national, international, and financial news channels; and religious channels. Sirius XM had approximately 19.5 million subscribers as of June 30, 2010 and generated revenue of approximately $2.7 billion for the trailing 12 months ended June 30, 2010.
REGULATORY DISCLOSURES
Sirius is defying the doom sayers
3:00 PM ET 10/13/10 | Marketwatch
NEW YORK (MarketWatch) -- It wasn't so long ago that pundits were taking out their shovels so they could give Sirius XM Radio a proper burial.
That was then. Reports of Sirius's demise have been greatly exaggerated. The Wall Street Journal pointed out that the company's new-subscriber growth tripled in the third quarter and it also plans to sell as much as $550 million in eight-year notes to Wall Street investors as it intends to refinance short-term debt. Read full story.
Sirius said it has added 334,727 net subscribers in the three-month period, more than tripling the year-before's advance. It now has 19.9 million subscribers.
Sirius got a bad rap during the recession. The argument went, with some justification, that many cash-strapped households would cut out a toy like satellite radio in tough times. But Sirius persevered.
The company continues to have challenges. The future of Howard Stern, its biggest star, remains a giant question mark. Will Stern decide to return to a traditional radio operation?
Plus, Sirius said that some U.S. states, directed by Ohio Attorney General Richard Cordray, are investigating its consumer practices. The question involves how Sirius XM takes care of its subscription cancellations and automatic renewals as well as other issues.
Sirius says its practices "comply with all applicable federal state laws and regulations."
To continue its winning streak, Sirius had better get serious about settling these matters with the inquisitive states.
S&P KEEPS BUY OPINION ON SHARES OF SIRIUS XM RADIO
12:20 PM ET 10/13/10 | S&P Marketscope
SIRI pre-announces Q3 net subscriber adds of 334,727, and with seasonally stronger Q4 still ahead, SIRI seems comfortably on track to meaningfully top full year guidance of 1.3M net adds (reaffirmed today). We see momentum primarily reflecting improved outlook for U.S. auto sales, currently projected by S&P Equity Research to advance 8.7% and 12.4% in '10 and '11, respectively, to 11.3M and 12.7M units. SIRI also released Q3 self-pay churn of 1.9% and OEM conversion of 48.1%, all told suggesting continued stabilization and notable Y/Y improvement in operating trends.
Thank God for Tuna Amobi . . the one analyst who's got some hair on his ass.
4th UPDATE: Sirius Subscriber Growth Soars; Note Sale On Tap
2:57 PM ET 10/13/10 | Dow Jones
4:00 PM ET 10/13/10
Symbol Last % Chg
SIRI 1.40 3.70%
Quotes delayed at least 15 minutes
(Adds used-car plans, key challenges, updates share price.)
DOW JONES NEWSWIRES
Sirius XM Radio Inc. (SIRI) reported third-quarter new-subscriber growth tripled in the third quarter and announced plans to sell up to $550 million in eight-year notes to institutional investors as it seeks to refinance shorter-term debt.
Shares were up 4.4% at $1.41 in recent trading even as the company also disclosed Wednesday that several states are investigating its consumer practices.
The stock has more than doubled this year as the company's balance sheet and results continue to improve, with subscriptions rebounding to above pre-recession levels.
The nation's only major satellite radio broadcaster posted a string of losses last year and struggled under debt from its 2008 merger with XM, needing a cash infusion from Liberty Media Corp. (LMCB) to pull it from the verge of bankruptcy.
Now it says it plans to tap a growing customer base by courting used-car buyers whose new vehicles already have a satellite radio. It envisions turning new-car sales into repeat business when owners sell or trade them in and is striking pacts with car-dealer networks to give used-car buyers trial subscriptions.
But subscribers have been signing up in droves this year. Sirius said Wednesday it added 334,727 net subscribers in the third quarter, more than tripling the year-earlier period's gain. It ended the quarter with 19.9 million subscribers. Chief Executive Mel Karmazin announced earlier this month that the company has again increased its year-end subscriber target.
Meanwhile, Sirius said Wednesday that the rate of customer defections in the third quarter was 1.9% among self-pay customers, down from 2% a year earlier. The rate of customers keeping the service after a free-trial period with a new-vehicle purchase rose to 48.1% from 46.2%.
As for the refinancing effort, proceeds from the note sale will go toward funding a tender offer of its $525.8 million of 11.25% notes maturing in 2013. Sirius is offering 12% above face value for them. A host of companies have announced similar moves of late as corporate debt issuers take advantage of record-low interest rates to lower their borrowing costs and extend debt maturities.
Moody's Investors Service upgraded the company by a notch to B3, lifting Sirius out of highly speculative territory. It cited the increased liquidity the refinancing would provide, as well as expectations that Sirius' subscriber base and revenue will keep growing. The rating agency noted the company still has a sizable debt burden and faces significant capital spending as it invests in programming, marketing and other areas.
Among the company's challenges: renewing its contract with Howard Stern, the controversial radio personality who brought millions of listeners to Sirius before its merger with XM, and competing with the increasing options consumers have in choosing how they listen to music and broadcast content.
The company also disclosed in a regulatory filing Wednesday a multi-state group led by Ohio Attorney General Richard Cordray has started an investigation into its consumer practices. Cordray's counterparts in Arizona, Connecticut, Tennessee and the District of Columbia are joining in the investigation.
A separate investigation of consumer-related practices is being conducted by the Florida attorney general. Additionally, Missouri's attorney general is probing the company's telemarketing practices in the state.
A spokesman wasn't immediately available to comment on the probes, but the company said in the filing it is cooperating with them and it believes its consumer-related practices comply with all applicable rules.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com
I don't know about anybody else, but I get goose-bumps reading that bold paragraph above - lol.
As to the debt, the new offering should "place" at somewhere around 7.25% to 7.75% . . shaving-off around 350-400 basis points from the current rate.
Mel is TCB
http://www.standardandpoors.com/prot...=1245230025828
Sirius XM Rating Raised To 'B+, Outlook Stable; XM's $550M Senior Notes Rated 'B+' (Recovery Rating: 4)
Publication date: 13-Oct-2010 18:03:33 EST
View Analyst Contact Information
U.S. satellite radio company Sirius XM Radio Inc.'s EBITDA generation and
debt leverage have improved, largely as a result of the resumption of
subscriber growth, selective price increases, and cost reductions.
We are raising our corporate credit rating on Sirius XM to 'B+' from 'B'.
The rating outlook is stable.
In addition, XM Satellite Radio Inc. plans to issue $550 million of
senior notes, which we are rating at 'B+' with a recovery rating of '4'.
The stable rating outlook reflects our view that a continued recovery in
auto sales will enable Sirius XM to stimulate growth and maintain credit
measures appropriate for the 'B+' rating over the intermediate term.
NEW YORK (Standard & Poor's) Oct. 13, 2010--Standard & Poor's Ratings Services
today raised its corporate credit rating on Sirius XM Radio Inc. and its
subsidiaries, XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc.
(which we analyze on a consolidated basis), to 'B+' from 'B'. The corporate
credit and related issue-level ratings were removed from CreditWatch, where
they were placed on Sept. 30 with positive implications. The rating outlook is
stable.
"The action is based on the company's improving operating performance,
declining debt leverage, and the prospects for continued improvement in credit
measures for full-year 2010 and 2011," explained Standard & Poor's credit
analyst Hal Diamond.
At the same time, we assigned XM Satellite Radio Inc.'s proposed $550 million
senior unsecured notes due 2018 our issue-level rating of 'B+' (at the same
level as the 'B+' corporate credit rating) with a recovery rating of '4',
indicating our expectation of average (30%-50%) recovery for debtholders in
the event of a payment default. The notes will be privately placed under Rule
144A. The company plans to use proceeds to back the tender offer for XM's $526
million 11.25% senior secured notes due June 15, 2013.
In addition, we revised our recovery rating on XM Satellite Radio Inc.'s
existing unsecured debt to '4' from '6'. The issue-level rating on this debt
was raised to 'B+' from 'CCC+', in accordance with the corporate credit rating
change and our notching criteria for a recovery rating of '4'. The recovery
rating revision reflects the planned refinancing of the secured debt in XM's
capital structure.
We also revised our recovery rating on Sirius XM's unsecured debt to '3',
indicating our expectation of meaningful (50%-70%) recovery for debtholders in
the event of a payment default, from '4'. The issue-level rating on this debt
was raised to 'B+' from 'B'. The revision of the recovery rating is based on
improved operating trends and our use of a higher EBITDA multiple than in our
previous analysis.
New York City-based Sirius XM had total debt outstanding of $3.1 billion as of
June 30, 2010.
The 'B+' rating reflects Sirius XM's high debt leverage and dependence on weak
U.S. automotive sales. The company's position as the only U.S. satellite radio
operator, integration-related operating synergies, and cost savings arising
from the 2008 acquisition of XM Satellite Radio Holdings Inc. are modest
positives that do not offset these risks. We view Sirius' business risk
profile as weak because of its dependence on U.S. automotive sales and
consumer discretionary spending for growth, as well as competition from
alternative media. The company has a highly leveraged financial profile, in
our view, because of very high debt usage.
The company's five-year agreement with radio talk show host Howard Stern
expires on Dec. 31, 2010. Despite onerous contract costs, we believe Stern has
been important to the growth of the service due to his loyal fan base and
exclusive content, which is not available on terrestrial radio. We believe
that subscriber churn would increase, potentially dramatically, should he
decide not to renew his contract. Still, we believe that that Sirius XM will
be able to maintain debt leverage in line with the rating irrespective of the
status of the Howard Stern contract, and adhere to a financial policy that
will facilitate debt leverage of less than 6x.
XM Satellite Radio Inc. is a wholly owned unrestricted subsidiary of Sirius XM
Radio Inc. Each company has a separate capital structure, and the cash flows
generally cannot be intermingled. The company is evaluating options to
consolidate the XM capital structures into Sirius XM Radio Inc. Consolidating
the capital structures would have no impact on the corporate credit rating, as
we analyze the companies on a consolidated basis.
Sirius XM Radio Inc.'s XM Satellite Radio Prices Offering of $700 Million of
7.625% Senior Notes Due 2018
6:14pm EDT
XM Satellite Radio Inc., a subsidiary of SIRIUS XM Radio Inc. priced an offering of $700 million of Senior Notes due 2018. The notes, which were offered pursuant to Rule 144A and Regulation S under the Securities Act of 1933 (Securities Act), will bear interest at an annual rate of 7.625%. The price to investors will be 100% of the principal amount of the notes. XM will receive gross proceeds of $700 million from the sale of the notes before deducting the initial purchasers' commissions and offering fees and expenses. XM intends to use the proceeds of the offering of the new Senior Notes due 2018 to repurchase its 11.25% Senior Secured Notes due 2013 pursuant to the previously announced tender offer and consent solicitation, to pay fees and expenses associated with the transactions and for general corporate purposes, which may include the repayment of other indebtedness. - - - - - (repeated)
Not too shabby . . Mel knocked 360 basis points off the current rate and pushed-out the maturity 5 years.
God Bless Hal Diamond . . Standard & Poors gets it!Quote:
Originally Posted by Boomer
I tip my cap to john; you have got to give the man his due . . he nailed the net-ads tighter than a clam's ass.Quote:
Originally Posted by john
http://www.freesmileys.org/smileys/smiley-whacky084.gif
If I was Miller-Tabak . . I'd have David Joyce pack up all his shit into a legal box tonight, have security walk him out of the building . . . and move john into his corner office first thing tomorrow morning!
Props to John, I agree with SRK!!!
SRK clean out some PM's
Jules our dinner might come sooner than we both thought :p
all clean!Quote:
Originally Posted by Hopeful
A Russian Proton-M heavy carrier rocket with a U.S. Sirius XM-5 satellite blasted off from the Baikonur space center in Kazakhstan on Thursday, a spokesman for Russia's space agency, Roskosmos, said.
The launch took place at 10:53 pm Moscow time [18:53 GMT], the spokesman said.
"The Russian part of the program will end at 08:05 a.m. Moscow time [04:05 GMT] when the spacecraft separates from the Briz-M upper stage rocket," the spokesman said.
A contract to launch the Sirius XM-5 was concluded between the Russian-U.S. joint venture International Launch Services (ILS) and the Sirius XM Radio, Inc.
Sirius XM-5, a powerful geostationary satellite built by Space Systems/Loral, will function as an in-orbit spare for the Sirius XM satellite radio network. All four previous Sirius satellites were launched on Proton rockets.
MOSCOW, October 14 (RIA Novosti)
Now lets just hope Goldman Sachs doesn't hire the North Koreans to "accidently" shoot down the Sat so that Mark Wienkes can initiate coverage with a "Conviction Sell" rating . . .
‘King of All Media’ Howard Stern will wear his crown somewhere
By Al DeGaetano | Radio | October 14, 2010
In 2006 when Howard Stern decided to get out of the confining rat race that was terrestrial radio, he embarked on a journey into the unknown. With two months left on his five-year deal with Sirius XM Satellite Radio it remains a mystery as to where Stern may end up – if anywhere. The consensus is that Stern won’t disappear. The possibilities range from having an internet-only show that will cost less to subscribe to than the $13 a month it costs to have Sirius to simply doing the same show, but fewer hours.
Stern signed a huge contract, at least according to the mainstream media, with Sirius to basically do the same thing he’d done for the past 30 years: entertain, provoke, and continue to ridicule anyone who deserved it – and even those that didn’t. Only this time he could say whatever he wants without invoking the delay button. The five-year, $500 million contract has been downplayed by Stern over the years as an overblown number, but needless to say Stern is one of the highest paid “personalities” in show business.
For many years, the attitude toward Stern and his show has puzzled many. The bashing that he’s taken his entire career mostly comes from those who have never heard the show. Perhaps it should occur to those people that the Stern show has been around longer than anything in the history of media, except for some of the soap operas that have endured through the decades. How can someone who evidently has no talent, revels in toilet-bowl humor, interviews porn stars and strippers, has the guts to put on the “Tiger Woods Mistress Beauty Pageant,” garner such an audience? Could it be that the Stern audience is affluent and intelligent?
Since his introduction to a widespread audience Stern has been great at making money for his employers. Stern has always been a company guy. He needs to work hard to make himself feel that he’s worth whatever money he’s making at the time. Let’s keep in mind that Howard was raised in a frugal Jewish household to depression-era parents who also had family members that were holocaust victims. Stern will turn 57 in January. He’s an old-school guy who believes in hard work. It’s one of the reasons that he despises Les Moonves, currently the President and CEO of CBS Corp. After so many years of being a tremendous moneymaker for the company, Moonves had the audacity to sue Stern when he went off to Sirius. It didn’t only disillusion Stern; it hurt him to his core. He couldn’t believe that after being a company man for that many years that they would do this to him. I’m still waiting for Stern to bring back the bit where he prays that someone he hates gets cancer. It sounds cruel, but it’s great radio, and that’s what this is all about – great radio!
Low-brow humor isn’t something that Stern invented. What he did do was mix that humor with topical subject matter and more mainstream comedy, and amazing interviews. He makes his long-time listeners feel like part of his family. Stern’s gift is honesty, and that honesty has paid off. He talks about his sexual fantasies, the women he’d love to have sex with, and what he would do to them if the opportunity presented itself. I’m obviously not using his exact words here!
Not enough credit is given to his supporting cast. Robin Quivers, Stern’s right-hand woman, has been with him for 29 years. Howard took Fred Norris with him soon after landing a gig in D.C. Gary Dell’Abate has been the Stern show producer since 1984. Stern’s loyalty is legend in the business. He claims that he’s unable to fire anyone and worries about where everyone is going to work once he “retires.” And retiring is the big news leading up to the end of this year.
Stern is as savvy as they come. He has the opportunity to negotiate on the air, but he does it in such a way that comes across as witty and self-deprecating. He’d love a nice three-day a week gig that doesn’t make him wake up at 4 a.m., which is something he’s done now for 24 years. There’s little doubt that he will do something. He has too much to say and would probably drive his wife Beth crazy with his constant needs and wants. Again, Stern freely admits that he’s obsessive-compulsive, neurotic, germaphobic, and sees a shrink three days a week. These are just a few of the reasons that he has legions of dedicated fans that now pay to hear Stern’s rants; everyone from doctors and attorneys, to housewives and truck drivers. There’s something for everyone.
The most glaring missing “character” in all of the conversation and replays of the past 30 years is Stern’s ex-wife Allison. She was an integral part of the show, as are Howard’s parents, Ben and Rae. It’s no surprise that any material including his ex would be off limits; whether by choice or the terms of his divorce. My belief is that he would have left that material alone regardless. People can demonize him if they like, but he’s a class act and remains all about the family unit. He’s gone to great lengths to shield his children and has done a great job making sure they didn’t turn into Paris Hilton. He took heat for divorcing his first wife and eventually marrying a woman almost 20 years younger. Stern isn’t much of a carouser. He’s a guy that needs to be in a relationship and is abused by his team and the fans because he didn’t go crazy enough after his divorce. He dated Beth Ostrosky for eight years before getting married in 2008.
Stern addresses his contract situation when phone calls come in from the audience, but doesn’t give much away. The announcement will come when Howard is good and ready. One has to think that discussions with Mel Karmazin, the CEO of Sirius XM, are ongoing. It’s safe to say that the current format will not exist come 2011. Speculation is that Stern will do fewer hours and perhaps fewer days. It will enable him to stay in bed longer and not live and breathe the show. He’ll get to do some of his favorite things like play chess, watch movies, and my all-time favorite, “stare at the walls.” I for one can’t wait to hear the decision. It’s really the most interesting media story out there, but because you have to be a subscriber to hear the soap opera it isn’t so much in the public psyche. You have to be part of the “in crowd” to know the happenings on not only the greatest radio show in history, but perhaps the greatest in the history of media.
Sirius XM Is a Smart Cookie
By Rick Aristotle Munarriz
October 14, 2010
A panhandling company isn't typically a rallying point, but Sirius XM Radio (Nasdaq: SIRI) shareholders have every right to cheer on new debt after the satellite radio provider announced last night that it had completed an offering of $700 million in new senior notes.
Let's see what has happened since the announcement.
•Lazard Capital analyst Barton Crockett is bumping his price target $0.30 higher to $1.65 a share -- reiterating his "buy" rating.
•Moody's upgraded the company's debt.
•Shares of Sirius XM opened higher this morning, despite a BGB Securities downgrade and an SEC filing indicating that several states are launching an investigation into the company's consumer practices.
What might you be missing? Well, it's important to point out that the $700 million debt offering -- originally slated to be just a $550 million deal -- was done primarily to buy back notes that are due in three years. Sirius XM is buying itself five years of repayment time, but that's not all. The new debt bears interest at a rate of 7.625%. The 2013 senior secured notes are yielding 11.25%.
Yes, Sirius XM is gaining time and interest expense money in the operation. Nice.
BGB's downgrade is based on valuation, but Lazard's rosier price outlook is the result of Sirius XM's successfully pushing out its debt obligations. Lazard's Crockett claims that the company can now cover the next few years of debt maturities out of its improving cash flow.
The company's model should continue to improve, as it has added nearly 1.5 million net new subscribers over the past five quarters. Closing in on 20 million subscribers, Sirius XM is the country's second-largest subscriber-based entertainment company. Cable giant Comcast (Nasdaq: CMCSA) (Nasdaq: CMCSK) is the top dog, but its video customers have been declining over the past year. Market darling Netflix (Nasdaq: NFLX), with 15 million couch potatoes on its rolls, is growing faster, but Sirius XM remains the only game in town when it comes to premium radio.
This doesn't mean that we can handily dismiss BGB's valuation argument. Sirius XM isn't exactly cheap as it now commands a hefty enterprise value of $12 billion. Several attorneys general ganging up with concerns over Sirius XM's billing and marketing practices will be a near-term distraction.
However, once again, Sirius XM's fundamentals continue to improve. When "valuation" becomes the lone arrow in a bear's quiver, you know you must be doing something right.
http://www.fool.com/investing/genera...rt-cookie.aspx
Latest Analyst Round-Up
BGB Securities – Murray Arenson $1.50
Janco Partners – Martin Pyykkonen $1.40
Barrington – James Goss $1.50
KOAT - Relmor Demitrius $3.25
Lazard – Barton Crockett $1.65
Miller Tabak – David Joyce $1.25
SBCM - Tyler Savery $1.10
Wunderlich Sec – Matt Harrigan $1.50
Standard & Poors – Tuna Amobi $1.50
Maxim – John Tinker $1.40
RBC – David Bank $1.00
Crockett was a little behind the curve until today . . but he's learning. Looks like Bank & Savery are still bringing up the rear. David Joyce is sending-out resumes.
Sirius (SIRI) Shares Volatile Amid BGB Downgrade, Raised Price Target at Lazard
October 14, 2010 12:02 PM EDT
Shares of Sirius XM Radio (Nasdaq: SIRI) are vacillating between positive and negative territory today as, following news late last night that the S&P raised its credit rating on the company, we are seeing some mixed analyst comments.
The stock last traded at $1.40, flat from yesterday's close.
BGB Securities downgraded the stock from Buy to Hold, but raised its price target from $1.35 to $1.50
Lazard Capital raised its price target on SIRI shares from $1.35 to $1.65 and maintained a Buy rating
October 14, 2010, 11:05 AM ET.
Sirius XM: Lazard Repeats Buy Rating; Raises Target To $1.65.
By Eric Savitz
Lazard Capital analyst Barton Crockett this morning repeated his Buy rating on Sirius XM (SIRI), while boosting his target on the stock to $1.65, from $1.35. He writes that the company’s debt refinancing “de-risks the balance sheet,” with only $230 million of borrowings due before 2013. “We estimate that Sirius can comfortably pay off all its debt maturities with operating free cash flow,” he writes.
"Limbaugh earns an estimated $58.5 million annually, amounting to almost $4 a listener, and Sirius XM pays Stern and company $100 million each year, of which Stern gets 80%. Lesser but still popular talk-radio talent earn a lucrative but far more modest 10 cents-$1 a listener."
http://www.hollywoodreporter.com/hr/...ter+-+Music%29
SRK
You really need to find a job...you have way too much time on your hands...Thanks for all of the updates!
JS
Quote:
Originally Posted by Sirius Roadkill
I am retired and while I am trying to preserve the money I have now, by getting conservatives elected, AND buying rentals (god you have got to love them so. Not only do you get a great tax deduction but in a bad economy, tenants are a dime a dozen and in a good economy, they are a dime a half dozen AND your value for your rental gos up faster). Save the country first and the rest will fall into place.