Take A Look At The 12b-25 Ext: What Does It Reveal?

[Siriusowner]

Keep in mind that that Sirius assets are not appropriately priced. The XM assets (the intangibles... ie, their FCC licenses) were revalued for the merger. For example, the licenses are now worth $2BB; the Sirius licenses are still valued at just $80MM. Quite a discrepency. But that is GAAP rules. In bankruptcy court, what will the licenses be valued at??? The current $2BB for the XM licenses? Or the $80MM for the Sirius licenses??

That will have an affect on what equity is leftover in bankruptcy court.



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Well, I over-simplified. There are so many possible interpretations under the GAAP system that many conclusions can be drawn.

In the end if they BK, shareholders will be basically wiped out.

[JohnnyIrishXM]

Well said Homer!!!! everybody relax and be prepared for the long run,it will take about 2 years for this stock to be out of the woods financially.in the mean time either buy more or turn off the P.C. or MAC and faget about it...

[yomann]

We're talking chapter 11, not chapter 7, so the subs should go nowhere. The business would continue to operate as normal from the subscriber standpoint.

Thanks for the feedback. Wouldn't that mean that sirius gets all the subs, but loses other assets, and the xm debt? It seems to me, that this might be a very good thing. Keep in mind, I'm a rookie..... Yo

[Dustyoden]

They should BK the subsidiary. However, I think that would axe the Malone deal, which would bk sirius.

It looks like the end of Sirius as we know it. They may file for chapter 11 prior to the 17th. This is really bad news people.

I have been trying to figure out (as I have always thought Sirius XM should BK XM holdings) if doing so would cause the Malone deal to be retracted.

After going over as much as I could again with the deal I think this would pull it off the table:

http://investor.sirius.com/secfiling...=930413-09-841

"The closing and funding of the XM Credit Agreement is subject to several conditions, including: (i) XM’s existing credit agreements being amended to extend the maturity of the loans to a date and on terms reasonably satisfactory to Liberty Media Corporation, (ii) Liberty Media Corporation purchasing assignments of loans outstanding under such existing credit facilities in an aggregate principal amount of up to $100 million, (iii) delivery of a report from our auditors in respect of fiscal year 2008 without any “going concern” or like qualification (or receipt of a waiver from certain lenders), and (iv) issuance of the preferred stock under the Investment Agreement. "

Specifically (iii), I don't know how you could BK XM holdings without have "going concern" for the company. Also, why would Liberty dump $150 mil into the XM Credit Agreement for them to file BK?


This, however, is all assuming that the deal cannot still go through and I'm not seeing anything definitive as to why Malone would pull out now? My interpritation of Part III-Narrative (http://investor.sirius.com/secfiling...950123-09-3789) is that if Sirius XM has to include "going concern" then Malone has the option to opt out. At this point though it seems to me the business interest with Sirius XM and Liberty is long term and not short term. If it was only short term I could see Malone opting out, collects in BK before bond holders and gets paid. However, I think there is much more money to be made by both companies by Sirius XM staying out of BK.

[cos1000]

Thanks for everyone's input and I agree that the negotiation has to be happening with all involved including the auditors. The process is not punitive just factual. In the end it is... what it is, and KPMG is there to state what will be required for a positive outcome. The rest is about the money...... and who gets what. The Bank Group is led by JPM and is going to want their share of this to extend, or else they'll want their money...

This is definitely why the SP is stuck here at .13. The run up on the Libery deal announcement, the release of the details, the extension with this, and right back down until the Auditor is done.

Hope for the best ...... Plan for the worst.... keep some powder dry for the days leading into the weekend of the 14th of March.... never a dull moment....

[FoolNHisMoney]

Its lawyer talk that basically says KPMG needs time to review the deal that Ma"loan" and Mel worked out, then KPMG will acknowledge that there is no going concern, then malone hands over the rest of the dough.

Malone has already seen the Q4 numbers and is fine with giving the money over based on this, but he didn't have enough time to review all of sirius xm's books when writing out this load so he wrote in the loan that if, for some reason, the auditor finds something drastic that Malone didn't have time to find between Feb 10th and 17th when he got involved that he still has an out.

summary: malone fast money, little review, auditor completes review and only concern is malone handing over more dough, alls good in da hood.

I've convinced myself all is fine so I can go to sleep now...

No, Malone included the clause because of the JPM $250 mil debt . . . this needs to be extended (assuming they will not be able to pay it off, a reasonable assumption). Not because of a Going Concern question. I think Ma"loan" is not quite right. It should be "Mayloan!"

The question is will they be able to extend the JPM debt? The sentiment here was pretty unanimous that this would be no problem before today. Why is this in doubt now?

[tucknroll]

985.....not to be too spazzy about this new news, but at .1399, there is not much wiggle room when bk is declared...IMHO

[homer985]

In the end if they BK, shareholders will be basically wiped out.

Could be... but if bankruptcy court valued the Sirius licenses to anywhere near the current value of the XM licenses, it changes that picture significantly... as there will be equity left over after the debt claims are taken care off.

The bond holders won't be able to just "take" $5+BB in assets to cover $4+BB in debt -- and keep the rest for themselves.



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[imromo24]

Hope for the best ...... Plan for the worst.... keep some powder dry for the days leading into the weekend of the 14th of March.... never a dull moment....

always wondered now i know:

Meaning

Be prepared and save your resources until they are needed.

Origin

The allusion is to gunpowder which soldiers had to keep dry in order to be ready to fight when required. This advice reputedly originated with Oliver Cromwell during his campaign in Ireland. In Ballads of Ireland (1856), Edward Hayes wrote:

"There is a well-authenticated anecdote of Cromwell. On a certain occasion, when his troops were about crossing a river to attack the enemy, he concluded an address, couched in the usual fanatic terms in use among them, with these words - 'put your trust in God; but mind to keep your powder dry'."

19th century citations of the phrase invariably give the full version - trust in God and keep your powder dry. This emphasizes that the keep your powder dry was seen only as an additional insurance. This is made clear in a piece from The Times Literary Supplement, 1908:

http://www.phrases.org.uk/meanings/217500.html

[FoolNHisMoney]

The bond holders won't be able to just "take" $5+BB in assets to cover $4+BB in debt -- and keep the rest for themselves.
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This is a very important point. So the question is do you think Sirius XM has more than $3.25BB (I think this is close to the current debt load) in assets? If so, then the rest has to go to the lowly shareholders.