Hartleib Question

Hartleib: (Anyone else with answers feel free to comment.)

I know you've been involved as an investor in the industry for a long time, but I don't fully understand the entire background. Can you explain your position to me? I would prefer a couple of sentences, as opposed to a document pasted into the thread.

Do you believe that Sirius brought an interoperable receiver to market and simply never activated it? If so, what receiver is it that you think is interoperable?

Is your position that Sirius management hurt shareholders by overpaying in the merger exchange, because they could have taken XM's subscriber base if they simply used a interoperable radio?

I keep hearing about a previous lawsuit from shareholders that you had some involvement in (preventing?). What was that?

Thanks

Yes. And it was a sham class action that would have caused shareholders to lose all rights. Also it would have indemnified Sirius Executives for all wrong doing! If anyone would like to talk send me your number in a private message and I will be happy to call back!

Quote:

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Do you believe that Sirius brought an interoperable receiver to market and simply never activated it? If so, what receiver is it that you think is interoperable?

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All of them?

Most! One or the other but not both at the same time. Read Tylers take on this fourm he understands the Interoperable issue. Three types is the key.

1. "Dual Mode" Receiver - a receiver capable of receiving the signals of Sirius, XM, or both at the same time

2. "Switchable" Receiver - A receiver capable of receiving either Sirius or XM, but not both services at the same time.

3. "Gateway" Receiver - A receiver capable of one switch only. i.e. Sirius receiver that can convert to XM, but can never be switched back.

Oh so you think the majority of satellite radios on the market released by either XMSR or SIRIUS are "switchable". Do you think they can switch back and forth, or are they merely gateways?

XM Reaches Agreement With Senior Noteholders

Tyler this looks like a very expensive deal. Does this cause a change to the value of the deal. It looks like a material change.15%

Why would the restructuring of debt in a post-merger transaction affect the value of the deal. Sirius went into this transaction knowing that a certain amount of XM's debt would need to be taken care of.

Are you suggesting that because the rest of $1 billion plus debt that needs to be renegotiated that the value of XMSR is lower than when the transaction was proposed?

It's not like XMSR went out and added $1 billion of unforseen debt to their capital structure.

Hartlieb

I keep getting crucified on this one, but I ask this without answer. Where in DC does anyone think that xm is getting 400 million dollars? They do not have it. It will have to come from Sirius which in my opinion....well...you already know my opinion.

The approved proxy states:

Adjustments to Prevent Dilution

The stock exchange ratio will be appropriately adjusted to reflect fully the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into SIRIUS common stock or XM common stock), reorganization, recapitalization, reclassification or other like change with respect to SIRIUS common stock or XM common stock having a record date on or after the date of the merger and prior to the completion of the merger.

...from my fingertips to Gods ear....here's the 400 million:


XM Announces Offering of Senior Notes as Part of Merger Refinancing



WASHINGTON , July 21 /PRNewswire-FirstCall/ -- XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) announced today that it is launching an offering of $400 million aggregate principal amount of new senior notes. The offering is part of a series of transactions to refinance certain debt of XM in connection with the pending merger with SIRIUS Satellite Radio Inc. The offering will be structured in a manner that will permit it to be unwound if the merger is not consummated. The closing of the pending merger remains subject to the approval from the Federal Communications Commission and satisfaction of other applicable conditions.




The notes will be offered in the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), to persons outside of the United States pursuant to Regulation S under the Securities Act and applicable private placement exemptions in such jurisdictions. The notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements.

The way I see around that, is that XM doesn't need to dilute to pay. The money comes due upon merging, at which point you dip into the combined company's coffers.

EDIT: Okay scratch that. That is clearly new debt which will affect the ratio.

EDIT2: I can't find the actual full length article. When does this occur? Are they issuing them now, or is this going to be issued upon the closure of the merger. That makes a huge difference.

It sounds like they are raising more cash. There's your 400 million you were looking for.

according to bloomberg, there is a 650 million dollar secondary on top of that...


http://www.bloomberg.com/apps/news?p...d=aysdu15uz3AI

according to bloomberg, there is a 650 million dollar secondary on top of that...

crfceo called this over a week ago on our phone call. 4.6 shares is out the window now . It has to be.

Don't you think that would noted in some sort of journalistic fashion?

"XM is issuing financing in the amount of. This will change the terms of the buyout agreement between their rival Sirius Satellite...."

If you owe me 5 dollars, and you don't have it. But I really want to buy a expensive pack of chewing gum. So you go to your friend and borrow 5 from him to pay me off. Are you still 5 dollars in debt?

It is to the cost of the debt from 9.5 % to 15% big cost in servicing the the money borrowed.

I'm figuring that's about a 5.8 share dilution on todays transactions..

I will say this one more time the radio is the ratio, it will not change to a great degree. The debt is and was the debt that it was, if SIRI does not like the terms of the XMSR dept then they can feel free to finance it themselves. They are after all, the ones that are buying XMSR and suppose to come up with the financing for it. Who here thought that the financial firms hired to look into this, before the merger agreement somehow missed this? I am as positive as one can be that they knew full well this debt was going to have to be refinanced and that both companies credit stunk to high heavens and that there was a credit crunch going on at the time. Let common sense take its course and you will find I am right.