2 Great Posts from Yahoo......
An accurate analogy of what Echostar is doing
Three things to keep in mind, #1 Echostar has not accumulated nearly 51% of SiriusXM debt (necessary)therefore it cannot take control,
#2 Echostar would need Sirius to default on the Feb debt for the courts to entertain their interst.
#3 If on the other hand Sirius pays the Feb debt due of $174 million then Echostar will have to stand by until May debt due and repeat the process.
#4 Is where it gets FUN. If Mel is the Mel that Wall street thinks he is, and happens to take care of the February and May debt all at once then ECHOSTAR will have to convert the debt it purchased into equity sending the stock to 52 week highs instantly. So in retrospect Ecostar could get paid the conventional way by simple appreciation of the stock price.
Now, Again I must warn that in my opinion, It is exactaly the #4 scenario that Mel was thinking of when he said " the Shorts will get Screwed along the way if they bet against us"
Not a fact (YET) just a warning!
>>>It's a highly risky way to take control and could easily backfire... remember Echo has $300M at stake.
Well not quite $300 million, but likely over $200 million. And it is risky, given their holdings would be junior to the bank debt, as noted.
My guess is that Sirius was trying to convince ECHO to a equity for debt swap on the remaining amounts of the Feb09 that they hold -- and ECHO was demanding too much... like a new senior convertible or to exchange it for preferred shares or something like that... and will not take the common, that Sirius likely offered them. That's probably what this is all about. Sirius still has the ability to just use cash - but that would certainly put Sirius in a tough position going through 2009, unless they can finally put together a new term loan, as they indicated they were interested in doing.
As for the Dec09 amounts -- obviously ECHO didn't pay face value for them, so they got that $200+ million at a deep discount. Sirius will have their work cut out for them to refinance that debt later this year. Even if Sirius clears the Feb and May hurdles -- I would not be surprised to see that the overhang from ECHO and these Dec09 bonds will hit the pps hard all year.
PS - As I suspected this afternoon -- ECHO had no purchases of the May09 bank debt. JPM and UBS have too much at stake with those holdings to just sell them to ECHO.
Another interesting post from Yahoo (pazzo)
I GOT THE ANSWER FINALLY, NOW IT ALL MAKES SENSE 30 minutes ago
Since the Merger of SiriusXM took place July 28th 2008 Changes to Programming have led the way in new developments. These changes in programming seemed confusing to me because instead of enlargening the specturm they reduced the spectrum.
In essence both companies sirius and xm operated individually with roughly 150 channel each ok? Now combining both companies should not warrant the removal of the strobe channel or Backspin any other channel for that matter due to the spectrum that doubled upon the merger.
Insted Mel has done the most intelligent thing possible and thats to free up XM'S satellites and sell it to Echostar, Sirius's orbiting satellites are not compatible with Echostars Set up but XMs Geostationary satellites are exactly what the doctor ordered.(ECHOSTAR)
Remember that Cutting costs also included selling XM'S washington DC building. Cutting costs is what Mel does and Ridding Himself of XM'S satellites will produce the Payments of debt due. Sirius will exist with it's own original satellites beaming to us subscribers and expansion will come From FM 5 to be launched soon.
REMEMBER WITH ALL THE BIRDS IN ACTION THEY SIRIUS WOULD NEVER HAVE TO CUT BACK CHANNELS BY REMOVING ANY OF THEM, HAVE YOU EVER WONDERED WHY HE WOULD HAVE TO REMOVE ANY CHANNELS AT ALL?
Kaufman Bros. analyst Todd Mitchell this morning noted in a research piece that the Sirius and XM satellite distribution platforms are largely duplicative. Mitchell says the Sirius platform is highly specialized for satellite radio, but that the XM platform is “basically relatively generic,” with “Boeing workhorse satellites in very strategic orbits.” Mitchell says the XM satellites could be re-purposed “for any number of things,” including incremental HD capacity for the DISH Network
The Hits Keep on Coming from Pazzo at Yahoo: interesting
XM'S MUSIC BEAMING SATELLITES WILL BE SOLD TO ECHOSTAR 4 minutes ago
THIS IS WHY WE HAVE THE SAME MUSIC LINE-UP FOR BOTH COMPANIES NOW. DAMN IM GOOD.
Full details on XM's birds:
XM provides digital programming directly from two high-powered satellites in geostationary orbit above the equator: XM Rhythm at 115° west longitude and XM Blues at 85° west longitude in addition to a network of ground-based repeaters. The combination of two satellites and a ground-based repeater network is designed to provide gap-free coverage anywhere within the continental U.S., the southern tip of Alaska, and in the southern part of Canada. The signal can also be received in the Caribbean Islands and most of Mexico (reports have stated that areas north of Acapulco are able to receive a steady signal[15]), however XM is not yet licensed for reception by paid subscribers living in these areas.
The original satellites, XM-1 ("Rock") and XM-2 ("Roll") suffer from a generic design fault on the Boeing 702 series of satellites (fogging of the solar panels), which means that their lifetimes will be shortened to approximately six years instead of the design goal of 15 years.[16][17] To compensate for this flaw, XM-3 ("Rhythm") was launched ahead of its planned schedule on February 28, 2005 and moved into XM-1's previous location of 85° WL. XM-1 was then moved to be co-located with XM-2 at 115° WL, where each satellite operated only one transponder (thus broadcasting half the bandwidth each) to conserve energy and cut the power consumption in half while XM-4 ("Blues") was readied for launch. Subsequently, XM launched ground-spare XM-4 ("Blues") ahead of schedule on October 30, 2006 into the 115° WL location to complete the satellite replacement program. On December 15, 2006 XM-1 was then powered down and drifted back to its original location at 85° WL, where it will remain as a backup to XM-3. XM-2 as well was powered down and remains as a backup to XM-4. This makes the current active satellites as XM-3 "Rhythm" and XM-4 "Blues" with two in-orbit spares.[6][18]
