This is a scathing breakdown of the Liberty deal. If this is all true, we are done.
http://www.briefing.com/GeneralConte...headOfTheCurve
SIRIUS XM SATELLITE RADIO FORUM
This is a scathing breakdown of the Liberty deal. If this is all true, we are done.
http://www.briefing.com/GeneralConte...headOfTheCurve
If the second phase of the agreement happens, Malone loans Sirius 150 million, and then buys upto 100 million of debt. That up to 100 million does not have to be paid back (and is the only portion that doesnt have to be paid back).
Basically, they were given 40% of the company in exchange for 100 million in cash because everything else must be paid back.
Yes, both company has outs. If Sirius cannot restructure their debt satisfactorilly by May, Malone can pull out of part 2. (But his money for part 1 is stuck... but it is Senior Secured so he will probably get most of it back. Besides, he got paid 30 million for making the loan anyways).
If Sirius can find a better deal, they can break out of part 2. The problem is that in addition to the 612.44 million due, they would also have to come up with an additional $301 million to buy back their $280 million loan from Malone, which means they would have to find someone who would loan them 913.44 million. (of course, that is without extending bank loans or trading stock for debt before then).
From Malone's standpoint: Would you rather have 40% of Sirius or a $280 million loan that pays 15%? He will use the payback clause from part 1 in order to make it more difficult to refinance without him.
i do not think malone is going to sit their and watch siri default on something when he is a 40 percent stake holder, malone has done this before, malone and ergen know this business model very well, and they know it will be profitable, dtv and dish weren't profitable at first either, they took time just like sirius will, but if u allow them the time they need then you will have a cash cow, and malone wants to be part of that cash cow, JUST WAIT AND SEE, this will be a beautiful partnership. I dont see why you guys are ignoring the fact that liberty will be a part of sirius by the time these giant loans come due, so why is it considered such a big deal? Would u be worried if it was mel that made the loans to siri? cause thats how i see it, i think the deal is a done deal i dont see any1 else coming to the table, i think liberty will get the deal completed, become a minority partner and then the debt wont be such an overhang because it will be in liberty's best financial interest to work with the debt to make life easier for siri.
if liberty gets a 40 percent stake the 100 million is just the start, yeah thats in the contract now but trust me liberty will end up putting a hell of alot more than 100 million into siri, they can always retire all debt if its in the best interest of liberty, and it just might be because they will make more with a fcf sirius than with keeping them strapped in debt.
Or, after his 3 year committment period is over (or with the assistance of another fund) Malone could control 50% of the voting rights in the stock and sell Sirius to Dish. Hmmm 3 year period? That is right about the time that Sirius is going to be profitable...
Or, he could trade another chunk of debt for more controlling interest and take over the company.
As long as I don't get screwed and Sirius doesnt go BK, I am happy though. Even getting shares in DTV if it aquires Sirius would be fine with me because about that time, Sirius will be a monster revenue maker and the stock should soar!
Yes, they will... for additional shares/board members/controlling rights.... Will each $100 million additional get them 2 more board members?Originally Posted by tripping
no i think they will do it because they will share in the cash siri generates when it's fcf, which will probaly give them more profit than anything else they do. Every time they spend some money on dtv does it have to be for something? no it can just be for the benefit of improving dtv's earning which will in turn improve liberty's earnings.
it will not be easy for liberty to get more than a minority stake, then we are dealing with the goverment all over again, i doubt they will try to achieve that.
sounds to me like the deal screws the bondholders, these are the "Bond bullies" right?
quote:
This makes Liberty a "secured lender," which is a substantially higher position of claim in a bankruptcy filing than bondholders.
This means Liberty's claims and desires will have more impact in a reorganization than bondholders, despite the fact that the bondholders have much larger financial claims.
So doesn't this make the bondholders more likely to "HELP"?
So that is great news that the article is trying to spin bad...it is great news because now the bondholders don't want siri to default because they don't get paid if siri defaults. They will allow the debt to be pushed until they can for sure get paid by the future cfp company.
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