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no hopeful it is typical covering ur ass type clauses. He could get a better deal but i dont think he plans o doing anything expect rolling with the punches, look at malone's history http://www.time.com/time/magazine/ar...983521,00.html i dont think mel is worried about partnering with malone,.
Thanks Tripp! :)
I'm still looking for clarity on this.....Quote:
Originally Posted by Demian
Homer?
By 'buying debt" I think this means buying the loan from whoever currently holds the loan. Sirius XM would still have to repay the loan under the terms as they currently stand (or negotiate new terms).
Here is a quote from Liberty Media's Q4 earnings call......
http://seekingalpha.com/article/1227...e=yahoo&page=2
They refer to the 530 million as "loans" which means all of the 530 million would need to be paid back. There is nothing free there and no debt for equity exchange. The preferred shares, which would be transferable into 40% of the common, are in exchange for the loans if SIRI and Liberty go through with phase 2 of the deal. I still have a strong suspicion that Mel was buying time with this deal to take BK off of the table and be in a better position to extend the Dec. converts as well as the May bank debt. If and when the remaining May and Dec. debt is extended/refinanced, SIRI should have enough cash on hand to be in a position to get out of this deal...Quote:
Just this month we announced also that we would be extending $530 million in loans to SIRIUS XM. We think that's a good deal for Liberty Capital as well as for SIRIUS XM.
We will know more when we see the Q4 results and their cash on hand. Even if phase 2 of the deal with Liberty goes through, the stock should not be trading at bankruptcy fear levels....
Here is more from Liberty's Q4 CC...........
Of course Liberty loves this deal - why wouldn't they? What's not to like about getting 40% of the company for loans @ 15% interest?Quote:
We like the fundamentals of the satellite radio business. We like the management team. We like the fact that they've been able to grow subscribers even in a very difficult financial and auto environment, and we're optimistic about the position we have, which is a secured senior debt position, and the upside we have with approximately 40% of the company in the form of warrants. So we think there's relative safety on our capital and upside for our shareholders. We are working diligently to complete Phase 2 of that transaction, in which we will actually receive that 40% of the equity and hope to have news on that in the coming weeks.
I find it hard to believe that Mel doesn't have his eye open for something better than this.....
Here is another quote from Liberty's Q4 CC which offers some hints about their motivation and strategy in regards to Sirius/XM......
http://seekingalpha.com/article/1227...e=yahoo&page=7
Quote:
Operator
Your next question comes from [James Raco] - Barclays Capital.
James Raco - Barclays Capital
I had two on LMDIA and one on LCAPA.
On LMDIA, after ELI spins what are your thoughts on the stub? Does it make sense for it to be stand-alone or should we really roll back in?
And secondly, is there any tax or regulatory restriction on announcing the terms of an LMDIADTV deal before the Entertainment spin actually takes place?
And on LCAPA, with a lot of liquidity now, the Sprint hedge is maturing in 2009 - 2010. You mentioned sort of a number of possible options. Can you talk about how you think about using that liquidity among acquisitions, share repurchase or maybe buying back some of the exchangeable debt?
Greg Maffei
On the LEI spin what happens to what effectively will be Starz, cash and the wild blue equity, we will see where it trades. We have no announced plan. It will be a relatively small public company. It will be relatively hard to know what its strategic direction is. We think there's a lot of positive things that are happening in Starz, but we'll see whether that should ultimately be a publicly traded tracker or whether it more appropriately belong recombined in some way. Stay tuned. No decision.
On a question of could you announce merger terms with DIRECTV prior to completing the spin, I believe you could. You would be subject to ensure non-taxability, a whole bunch of [inaudible], probably the most important of which is Morris Trust, which would say that our shareholders have 51% of vote and value in any post-spin merge combination. Albert Rosenthal is giving me the nod that I've got that right, and we're very cognizant of that. But frankly, if you look at the economic value in any kind of combination, we probably would not accept any deal that had less than 51% of vote and value, so that probably is not a restraining factor as a practical matter.
Last question on Starz, we will have a fair amount of liquidity at Starz. We have a fair amount of liquidity now - excuse me, LCAPA. We do at Starz as well, but at LCAPA - thank you; I meant LCAPA - and the Sprint collar's maturing will only further enhance that.
We will look for deals like SIRIUS XM. We will consider debt repurchase. We are noteworthy of the five and five deal that got approved in the stimulus bill that for five years you will not recognize any COD income on a debt repurchase, and then you will recognize it ratably over the next five years. On a present value basis that's quite attractive in terms of changing the dynamics of debt repurchase for Liberty. And there frankly may be some other things that happen in how that bill is interpreted that make it more opportunistic for us or more realistic for us to look at even attacking some of our exchangeables. We are working through that. Stay tuned on that as well.
And lastly, as I noted, we shrunk about 26% of the equity of LCAPA. We consider that equity undervalued. The potential to repurchase more of that is also on the table.
So all three things, to answer, are things we have already executed on in the way to debt repurchase that gets better in a post-stimulus bill through attractive and, in this case debt, focused with warrant kicker investment in the case of SIRIUS XM or a share repurchase in the case of the shrink we've already done. All three could potentially be attractive.
Another quote from Liberty's Q4 CC that speaks of the possible synergies with DirecTV and Sirius/XM.....
http://seekingalpha.com/article/1227...e=yahoo&page=9
Quote:
Operator
Your next question comes from [Matthew Harrigan - Wonderlit Securities].
Matthew Harrigan - Wonderlit Securities
I had a couple questions. Firstly, I was curious if Greg would be comfortable commenting more on how they view SIRIUS strategically in light of what's happening with the OEMs right now and maybe even the prospects for bundling with DIRECTV at some point or maybe even using some of the repeaters for some other purposes, which I suspect isn't very likely, but I thought I'd still ask.
Greg Maffei
Okay, a couple of different topics there.
So on SIRIUS, I'm not sure it's strategic. Obviously, a lot of these OEM deals, just like a lot of these content deals, were cut in an environment where two players - SIRIUS and XM - were bidding and there's certainly more than anecdotal evidence that in many cases they overpaid because of the prospects of the two people bidding aggressively. Some have suggested that a bankruptcy would be positive for that company in terms of re-cutting those OEM deals, recutting some of those content deals, and obviously resetting the capital structure.
We believe that SIRIUS has a very good chance to grow its way in and renegotiate those contracts, as they are doing in many cases, and, as certain contracts mature, reset those contracts at attractive levels such that it will be able to build equity value for its shareholders. Obviously in the event that it does not happen and some of those things are not successful - and it could be in part related to how the domestic car market grows or does not grow - we took a position in the senior debt which we believe is relatively secure against the downside possibility. We're rooting for the upside; we're hoping Mel is as successful as he can be at doing some of these things, but we are positioned okay, we believe, if that does not come to pass.
In terms of the bundling, we certainly see those as opportunities down the road. One can talk about or imagine bundles, particularly probably the $80-plus DIRECTV product offering free trials of the $11 SIRIUS XM product more likely than the other way around, just given the dollar value of the customers and the subscriber value. I certainly think those are things that we have talked about and surmised. We did put a lot in our valuation for that, but it's something that Mel is enthused about, it's something I believe Chase is enthused about, and I hope we'll be able to proceed on some of those in ways that are obviously beneficial for both parties.
On the larger technical questions, I think things about space segments and repeaters and those are sort of in the future. The great dream perhaps is that you have 25 megahertz of spectrum that you're able to broadcast and as compression gets better even more, 150 audio channels on one consolidated SIRIUS XM platform that only consumed 12.5 megahertz of spectrum and 12.5 megahertz becomes therefore available for mobile video, and that would be a great intersection of where the skills of SIRIUS XM and DIRECTV reside.
That's a long way down the road and highly speculative. There is no plan currently to merge the SIRIUS and XM platforms. There's a whole bunch of technical issues around the quality of that video that is likely to be. There's something that SIRIUS XM already does, particularly in things like the cartoon space, that are interesting, but to really expand that in the mobile video space, we'll see. That's the grand and glorious future we can only hope comes to pass, but we didn't put a lot of stock in that when we did our evaluation.
Was Malone looking for tax benefits along with the 15% interest and 40% stake? What's not to like about this deal for him?
http://www.nypost.com/seven/03052009...bts_158087.htm
Quote:
By contrast, Malone, the head of Liberty Media, was primarily looking to capture the hundreds of millions of dollars in tax credits gained from inheriting Sirius XM Satellite Radio's non-operating losses.