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

[homer985]

A churn rate of 1.7% or self-pay subs adds up to about 3.2 million or so lost subs for the year. Even with 9.1 SAAR we should see an add of 2+ million as you state. Now we have to assume that retail sales will add something to the numbers, so no way in hell could we lose 2 mil subs overall. Keep in mind that penetration rate is also on the rise - should be well over 50% for 09, maybe even 60%. IMO retail sales is where they will need to concentrate this year as auto sales are not looking like they will pick up substantially this year. Go iPhone app!

FoolNHisMoney... my figures were based on Sirius XM maintaining 20MM subs for the year... not a decreasing figure. If churn is 1.7% each month, then that will be 340K cancellations each month -- or just over 4MM for the year - which would need to be replaced. My 50% OEM penetration rate is a conservative estimate, yes. Even so, that adds in 2.28MM in new OEM subs for 2009. This leaves Sirius XM needing to bring in about 1.72MM in GROSS new RETAIL subs during 2009... or approximately 430K each quarter.

Looking back at 2008 for a moment, XM had GROSS added over 450K retail subs in the first half of the year. Sirius' retail gross should be about the same amount... so that takes the figure up over 900K in the first half. Then, keeping in mind that Q4 is typically 40% or more of the annual gross retail subs for DARS... I'll continue to be conservative because of the economy and estimate that Q4 was only 30% of the annual sales. That still puts my estimate of gross retail subs for both companies at about 2MM for the 2008.

For Sirius XM to not lose subsribers for the year -- they need to gross add an additional 1.72MM at retail, approximately. With Sirius XM doing over 2MM in 2008, can they do at least 1.72MM in 2009? That is the question.

I think they can...

Furthermore, as you noted above - the OEM figure is making 2 big assumptions... First, it assums no improvement in sales going forward in 2009; and also assumes just a 50% penatration rate on a very low annual sales figure.

Jump back to 2007... total US auto sales topped 16MM and XM was installed in about 3.5MM of them. The ramp had XM going into 4MM in 2008 and 5MM in 2009, with Sirius right behind them. With the 2009 projection of 5MM XM and perhaps 4+MM Sirius and annual sales projection of 16MM auto -- that puts the penetration at about 56%. You put that penetration rate on 9.1MM vehicles sold in 2009 -- and then a 50% take rate -- that increases the OEM additions for 2009 up to 2.5MM. Making the need at retail even smaller.

So yes, I still very much disagree with Brandon's numbers and claims.



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[sl62]

"The loan is guaranteed by our wholly owned subsidiary, Satellite CD Radio, Inc., a Delaware corporation (the “Guarantor”). The Credit Agreement is secured by a lien on substantially all of our and the Guarantor’s assets, including our four satellites and the shares of the Guarantor."


Everyone keeps saying, why would Malone do this deal just to wind up in BK court... I could be reading this wrong, but doesn't that paragraph above state that the loan is guaranteed by all of SIRI assets, therefore malone would not have to fight in court for his money back he would be first in line???


If Brandon goes through with his article, will we go back to the BK scare and back down to .05???

Hopeful...

Yes, he's first in line, but if SIRI has to reverse this deal, they are right now on the hook for $250M (the first part of the deal that already has been consummated). Plus, Liberty would also be entitled to $21M in consolation fees. So given the fact that there was a good reason that Mel pulled the trigger on Part 1, how exactly would you think they would be "repaying" Liberty on a call. Backed by assets is just that. Those assets would need to be liquidated as SIRI would need to come up with $271M forthwith. You might be thinking of an asset transfer out of BK, but if it were that easy, one has to ask why that just wasn't done in the first place. No, I have to stick with my initial thought process and say no change of course on this deal. Because of what wouldn't happen with respect to the remaionder of the funding, SIRI would be forced to file and ALL assets would head into court. Malone might be entiteld to assets first but he'd have to go to court to get them. This would be one huge mess. And again. Mel didn't pass up the opp to BK in Feb based on HOPING KPMG wouldn't issue a going concern warning and spoiling his plan. If BK were the answer, intelligence has to say it would already be done. IMHO..

[Hopeful]

Thanks Sl,

http://www.cnbc.com/id/15840232?video=1037475223&play=1

[john]

Hey I only read the first 5 pages of the thread before I just skiped the rest. I'll just say this I think it is all bullshit. Reason one I dont think they had negitive adds. Reason two I dont see anyway on this green earth they could have blown through 360 million in COH in the forth quarter. A quarter mind you they have been showing a growing FCF and finally a positive FCF for the last 2 years. Last time I checked 250 million from 360 million is still 110 million. Also is somebody going to try and tell me they shot through more of their COH in the 4th Q then they did in their 3rd Q, come on.


FoolNHisMoney, Just so it is clear I basically said I dont think it would be crazy to think they had 1 million GROSS adds from retail. That also was because that is what would have been needed if Brandon (1 million GRA) and Miller Tabyk (only 900,000 GRA) were correct in there estimates. Not that I think it happen. I am still using Mels last estimate he gave about them being on track (just after Black Friday). I will say again he stated that they beat their goal but that is really not saying much because they set a low goal in the first place (I believe that was the 19.1 million he was talking about).

I also wanted to add the fact that it was not to long ago that Mel said that they would be FCF even if not for CAPEX (I believe that to mostly come from the satellite launch in the Fall) so cancel that and what would they need the additional COH for, except at various times during this year. I mean they should be at about the same place they were at by the end of the year 2009 as they were in the beginning of it.

[homer985]

Yes, he's first in line, but if SIRI has to reverse this deal, they are right now on the hook for $250M (the first part of the deal that already has been consummated).

I don't know that Liberty is first in line -- Sirius has a $250MM Senior Secured Term Loan (dated June 2007, maturing December 20, 2012) with Morgan Stanley. I do believe that the Banks are in line first, followed by Liberty's $280MM. Though it says the default provisions of the Liberty loan is essentially identical to the Morgan Stanley loan -- so they both may be first in line.



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[Hopeful]

So then it wouldn't be to difficult for Malone to get his money and make a bit on top???

I am not saying that Malone would have done this deal just to go to BK court. Just yesterday everyone was saying things like he would have to fight hard with everyone else to get money back and if he is first in line that would not be the case!

If they filed chapter 11 would Malone be out of luck?

[trippingthespeculatingpos]

hopeful if siri goes bk he will not lose out but he will no gain as much either, bk is not what malone wants, but like a good businessman he has covered his ass in case of a bk.

[sl62]

Now, looking at today's GM 10K release and "going concern" issue from D&T. CNBC earlier ths morning brought up a good point on this..that may have certain relevancy to SIRI. D&T's warning it appears was soley based on the company and it's state of being AS OF 12/31/08.

As in:

>>"The corporation's recurring losses from operations, stockholders' deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern,"<<

But this is what's important:

>>The company faces a March 31 deadline to have signed agreements of concessions from debtholders and the United Auto Workers union to show the government it can become viable again. On Feb. 17 it submitted the restructuring plan to the Treasury Department that includes laying off 47,000 workers worldwide by the end of the year and closing five more U.S. factories. GM said in its filing that its future depends on successfully executing the plan.<<

and...

>>"If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code," <<

So how does this relate to SIRI? I say it reopens the door for MSM and BK talk--even though BK won't happen. Cause here is the GM headline this morning:

>>Will GM Be Forced Into Bankruptcy?
By TOM KRISHER

AP
posted: 1 HOUR 8 MINUTES AGO
comments: 238
filed under: Financial Crisis

DETROIT (March 5) - General Motors Corp.'s auditors have raised "substantial doubt" about the troubled automaker's ability to continue operations, and the company said it may have to seek bankruptcy protection if it can't execute a huge restructuring plan.<<

If KPMG is bound to opine on the books AS THEY WERE ON 12/31/08, and if they are not legally allowed to take in any recent '09 deal developments, then intelligence has to believe they will issue a going concern clause. Thus the above will inded be their headline..

But..they could also interject specific language in that clause that specifically comments on the current Liberty deal funds.. i.e. "If SIRI were able to secure new funding that addresses certain debt issues, then our opinion is concerns would be relieved"..knowing full well (as Malone and SIRI already have the deal in place and staged) the deal would then trigger.

The other thing reported that GM said in their 10K was:

>>GM warned last month that its auditors may raise the doubts, and industry analysts said auditors' statements may trigger clauses in some of GM's loans, placing them in default. But the company said in its filing that it has received waivers of the clauses for its $4.5 billion secured revolving credit facility, a $1.5 billion term loan and a $125 million secured credit facility.<<

So SIRI and Malone could use such waivers if "everything else" from KPMG is good to go and viable..which IMHO, I can't see why it wouldn't be.

All we have is conjecture right now. But I still see the positive side of how this all unfolds. Will we revist those MSM BK headlines from Feb due to nomeclature and semantics before this is all over?..possibly. But all a currently invested shareholders (esp. those of us underwater) can do from here is keep riding the wave. It would be more crininal not to IMHO. If KPMG can't include recent '09 developments in ther opinion, it's next to a guarantee MSM rears their ugly BK head and the SP dives again as KP issues the warning. It doesn't mean BK is a reality at all because if the concern is solely based on lack of financing, Liberty has the option to waive this contingency if it feels satisfied otherwise. My take is LIberty saw the Q numbers and felt good. All they want to see (and hence the waiting period) is a legitly audited representation of those numbers. SAME WITH JPM and the $250 Bank Revolver. But if this goes into more drama in the interim, like last time, it becomes a new money making opp at lower prices. One day at a time is all we have.

[homer985]

hopeful if siri goes bk he will not lose out but he will no gain as much either, bk is not what malone wants, but like a good businessman he has covered his ass in case of a bk.

Agreed. In BK, Liberty likely gets their money back -- but may not get a significant stake in the company, as that could possibly get split up over a much wider crop of debt holders. However with no bankruptcy and a push to complete phase 2 -- Liberty gets a major piece of the company.



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[Hopeful]

Anyone have an idea why the media has not pounced on this and started the BK scare all over? Or is it just a matter of time until they do?