Originally Posted by
trippingthespeculatingpos
why it makes sense for echo to do this
this is not my words but taken from a yahoo post.
"Echostar is purchasing some of the debt Feb and December. This will alleviate the burden for Sirius to refinance. When the debt matures (very soon) Echostar will refinance with Sirius and issue new convertible debt at a low pps.
Why doesn't Echostar just buy up shares instead? Because if nobody buys the debt then the company goes bk and the shares are worthless.
By buying the debt, Echostar is having a call option if the pps goes up and is secure if the company fails.
Why would Echostar do this? To make money and to hold a large investment in Sirius (convertible debt).
Why not just bk Sirius and then own the whole thing on the cheap? It doesn't work that way. If you bk Sirius then there is along court battle over assets. Plus, with Echostar owning so much spectrum an with Democrats in office, they would never get approval to buy all of Sirius. A partnership/investment through ownership in debt (soon to be convertible debt) is the best answer."