SIRI Weekly Thread 8-10-09

[Siriustunes]

[QUOTE=john;47098]I dont know why they took the loan to be honest the fees are going to eat up any savings they had in a cheaper interest rate. Look, 500 million X 3% = 15 million a year in savings. Now correct me if I am wrong but the fees were something like 36 million right. All for a loan that is 4 years long before it comes due.[/QUOTE


Good point. Do you think Malone just wants his money and then sit tight with 40% of the shares which I guess would then be basically free?

Nice exit.

[john]

no question about it . . the good thing is, you/we still have that great opportunity to average down . . even at current share prices . .

the operational fundamentals of this company are better now than at any time in the past when we gladly handed over our cash in exchange for shares of equity . . so we should be even happier to do it now.

the opportunity to add at these levels (below our average) may only last until this equity becomes "marginable" again . . then watch-out; any buyers right now are cash-only buyers . . but we are still a credit driven economy . . leveraging makes all the difference in the world . .

how much would single family homes sell for if they had to be paid for in all cash from the buyer (no 3rd party financing; assume mortgages as we know them didn't exist and the seller couldn't hold any paper)?

can't tell ya how many buddies of mine were thrown into a forced-sale when they couldn't make the never-ending margin calls that started sometime in September . .

getting back to marginable levels will be very interesting . .

I am not sure if you recall but I said the samething about margin calls before over at Seeking Alpha a while back when they were on their way down and what would happen. It did just as I said when I said it would. I think you are correct it will do something very simular on the way up. I dont know what the margin requirements are for SIRIXM but once it hits that mark we should see a rise from that alone.

[john]

[QUOTE=Siriustunes;47101]

I dont know why they took the loan to be honest the fees are going to eat up any savings they had in a cheaper interest rate. Look, 500 million X 3% = 15 million a year in savings. Now correct me if I am wrong but the fees were something like 36 million right. All for a loan that is 4 years long before it comes due.[/QUOTE


Good point. Do you think Malone just wants his money and then sit tight with 40% of the shares which I guess would then be basically free?

Nice exit.

I will just say, who wouldn't. They are going to be playing with the houses money from that point on.

[Siriustunes]

Did CA just wake up?

[Sirius Roadkill]

I dont know why they took the loan to be honest the fees are going to eat up any savings they had in a cheaper interest rate. Look, 500 million X 3% = 15 million a year in savings. Now correct me if I am wrong but the fees were something like 36 million right. All for a loan that is 4 years long before it comes due.

Hi John

I think they are looking for $250mm on this offering . . so, lets say they get 11% and we use simple interest as above: $250mm X .04 = $10,000,000/annum X 4 = $40mm . . I'm not sure how high the prepay fees will be and if there is a large penalty but I wouldn't think it exceeds $40mm; but I could be wrong . .

Anyway, there is legitimate reason to push back the maturities . . that is to schedule the principal repayments to coincide with future expected cashflows so that they can be paid from cash-on-hand . . I'm not saying they will; but they will at least have that option . . . just timing of cashflows; good business.

Also, it can't hurt the credit rating to lower the interest rate and extend the maturities on short term debt . . it is a more appealing balance sheet.

Remember, we gave Mel holy hell for not refi'ing the Feb converts soon enough (and rightfully so); so now he's moving with light-speed . .

The plusses outweigh the minuses imo

[Siriustunes]

Did CA just wake up?

Ahh, Ford announced they are upping production due to cash for clunks.
I am afraid car sales will once again fall off a cliff when this clunker money expires. It apparently transpired the same way in Europe when they did it.

Good way to clear some inventory though.

[john]

Hi John

I think they are looking for $250mm on this offering . . so, lets say they get 11% and we use simple interest as above: $250mm X .04 = $10,000,000/annum X 4 = $40mm . . I'm not sure how high the prepay fees will be and if there is a large penalty but I wouldn't think it exceeds $40mm; but I could be wrong . .

Anyway, there is legitimate reason to push back the maturities . . that is to schedule the principal repayments to coincide with future expected cashflows so that they can be paid from cash-on-hand . . I'm not saying they will; but they will at least have that option . . . just timing of cashflows; good business.

Also, it can't hurt the credit rating to lower the interest rate and extend the maturities on short term debt . . it is a more appealing balance sheet.

Remember, we gave Mel holy hell for not refi'ing the Feb converts soon enough (and rightfully so); so now he's moving with light-speed . .

The plusses outweigh the minuses imo

I am talking about the last bond offering they had. The fees were 36 million just to borrow the money not including the early pay off penalties.

I also think if you look at it from the point of when the old loans came due and now the new ones it is really 3 years not 4. I made the mistake at first so sorry about that.

P.S. Hi

[Sirius Roadkill]

I am not sure if you recall but I said the samething about margin calls before over at Seeking Alpha a while back when they were on their way down and what would happen. It did just as I said when I said it would. I think you are correct it will do something very simular on the way up. I dont know what the margin requirements are for SIRIXM but once it hits that mark we should see a rise from that alone.

Yup . . that's when we should see the upward spikes; right now we are still trading at cash-only/forced sale price levels, imo. dyodd

I think the margin levels are set by the individual brokerage houses. For example, here are the margin requirements for Etrade for the most common types of positions:

Type of Security Initial Margin Req.
(Minimum $2,000 equity)

Long Stocks and Warrants:below $2.00/Share
100% market value

$2.00 - $2.99/Share
$1.50/Share

over $3.00/Share The greater of 50% or
special margin requirement


So for Etrade at least . . it looks like $2.00 is the minimum shape price to be marginable again . .


P.S. john, i think that is when I got banned by SA for putting up Jim Cramers home address and his bogus "gentlemen farmer" tax break that he gets from NJ . . that damn abby; never went back to that site after that.

[john]

Ahh, Ford announced they are upping production due to cash for clunks.
I am afraid car sales will once again fall off a cliff when this clunker money expires. It apparently transpired the same way in Europe when they did it.

Good way to clear some inventory though.

Thats is exactly what I was saying about this program it is doing something earlyer then would have happen anyway just at a slower and more sustaning pass. A car is not like a candy bar, it last alot longer and is something people generally need to have.

[john]

Yup . . that's when we should see the upward spikes; right now we are still trading at cash-only/forced sale price levels, imo. dyodd

I think the margin levels are set by the individual brokerage houses. For example, here are the margin requirements for Etrade for the most common types of positions:

Type of Security Initial Margin Req.
(Minimum $2,000 equity)

Long Stocks and Warrants:below $2.00/Share
100% market value

$2.00 - $2.99/Share
$1.50/Share

over $3.00/Share The greater of 50% or
special margin requirement


So for Etrade at least . . it looks like $2.00 is the minimum shape price to be marginable again . .


P.S. john, i think that is when I got banned by SA for putting up Jim Cramers home address and his bogus "gentlemen farmer" tax break that he gets from NJ . . that damn abby; never went back to that site after that.

Thats who banned me the first time to. I asked her to give me an example of what I did that the other guy was not and she could not, I was still banned. I believe it was several people over there at the time, that also wrote her to get me back because 2 months later they finally unbanned me. That has not happen this time though, I think it is because to many of the others left.