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Sirius Satellite Radio...Bankruptcy?

With heavy debt payments just round the corner, Sirius XM Radio Inc Chief Executive Mel Karmazin is under increasing pressure to strike a deal with Charlie Ergen's EchoStar Corp to avoid bankruptcy.

Wall Street analysts say a deal with Ergen is emerging as the most likely and preferable scenario for the satellite radio provider, whose main growth engine -- sales of new cars with Sirius radios -- has been hit badly by the recession.

Ergen, the majority owner of satellite television company EchoStar and its sister company Dish Network Corp, holds $175 million in Sirius convertible notes that mature next week and holds another $400 million of debt due in December, media reports say.

This means Karmazin has to work with Ergen or find some other source of cash, which is unlikely in these markets.

"Given Sirius' lack of alternatives, talking to Charlie Ergen would be advisable," said Stanford Group analyst Frederick Moran.

"From a strategic standpoint, if Dish can gain control of Sirius for pennies on the dollar, it could be of strategic benefit long term," Moran said.

At the other extreme, Sirius could file for bankruptcy protection -- it has already engaged law firm Simpson, Thacher & Bartlett LLP as bankruptcy counsel and restructuring firm Alvarez & Marsal, according to the New York Times.

But that could open up Karmazin to the risk of shareholder lawsuits, particularly if Ergen had made a bid for the company. The Wall Street Journal reported that Ergen offered late last year to restructure Sirius' debt and inject several hundred million dollars of capital in return for control.

"I think he'd prefer to strike a deal out of bankruptcy," said Chris Marangi, a portfolio manager at Gabelli & Co, a holder of Dish and EchoStar shares.

Both EchoStar and Sirius declined to comment.

IF NO DEAL ... THEN ....

Sirius has $175 million of convertible notes maturing on February 17, $350 million of secured bank debt due in May 2009, and $433 million in convertible notes due December.

I would be bummed if Sirius/XM bust.

there will still be a company, just with different owners

Vitamin E Wrote:I would be bummed if Sirius/XM bust.


apple Wrote:Aww, but mich, its only a 22 year age difference, I'm still legal :broken:

Bill Wrote:The pool is frozen like Tom Foolery's Saturday night date's snatch.

pineschic Wrote:comon' over here big boy (Vita E).. I'll warm you right up. lol

x 3 My car came with it. VW was very good me.

I guess Howard Stern is Sirrius's Kennth Lay.

stern brought in millions of subscribers.
look to martha stewart and orpah for money wasted.

i guess i will renew
Liberty Media to invest in Sirius XM Radio
1 hr 13 mins ago

NEW YORK – Liberty Media Corp. will invest $530 million in financially struggling satellite radio company Sirius XM Radio Inc., the companies said Tuesday.

The investment on the first business day comes after Sirius warned it could file for bankruptcy as early as Tuesday if it cannot successfully negotiate with its debt holders.

As part of the deal, Liberty will provide a $280 million senior secured loan to Sirius, $250 million of which will be funded on Tuesday. Sirius will use the proceeds of the loan to repay $171.6 million of its maturing 2-and-a-half percent convertible notes that had been due Tuesday. The rest will be used for general corporate purposes.

The loan bears a 15 percent interest rate and matures in December 2012.

The second phase of Liberty's investment provides another loan of $150 million to Sirius's subsidiary XM Satellite Radio. Liberty has also agreed to offer to buy up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities from the lenders.

In exchange, Liberty will get 12.5 million shares of preferred stock convertible into 40 percent of Sirius's common shares, and two seats on the company's board. The company said it expects Liberty Chairman John Malone and President and Chief Executive Greg Maffei to join the board of Sirius.

Shares of New York-based Sirius nearly doubled their value in premarket trading, jumping 9 cents to about 20 cents.

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