Is a Reverse Split in the Cards for Sirius? 231 comments
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Sirius XM Radio (SIRI) filed a preliminary proxy statement Thursday with the SEC. While the document is lengthy, the biggest two items of note appear on the first page:
- To approve an amendment to our certificate of incorporation to increase the number of authorized shares of our common stock from 4,500,000,000 to 8,000,000,000 shares.
- To approve an amendment to our certificate of incorporation to (i) effect a reverse stock split of our common stock by a ratio of not less than one-for-ten and not more than one-for-fifty at any time prior to December 31, 2009, with the exact ratio to be set at a whole number within this range to be determined by our board of directors in its discretion, and (ii) reduce the number of authorized shares of our common stock as set forth in the proxy statement.
What does this mean?
Well, first it is a proposal to allow for an increase in authorized shares from 4,500,000,000 to 8,000,000,000. For long term investors this is a scary prospect. It would allow for a substantial amount of dilution, which in turn would carry a negative impact on the stock price. To be clear, this does not mean that any shares will be issued. It simply means that the company would be authorized to issue shares if they deem it in the best interest of the shareholders.
The second issue here is the potential for a reverse split. The company is asking that shareholders approve the ability to conduct a reverse split in a range between 1 for 10 and 1 for 50. In simple terms, a 1 for 10 reverse split means that if you have 10 shares of stock, currently priced at .39 cents each, you would now have 1 share priced at $3.90. In a 1 for 50 reverse split, 50 shares, fifty shares priced at .39 cents each would become one share priced at $19.50.
Now, there seems to be some confusion regarding these two points. If we assume that the authorized share count is accepted at 8,000,000,000 shares, a reverse split would happen after the fact. Thus, a 1 for 10 split would bring the authorized share count to 800,000,000. A 1 for 50 split would bring the share count to 160,000,00 shares.
Reverse splits are never viewed as a positive event. They are typically a function of a company that is running out of options. While satellite radio may be a great service, the current situation has backed this company into a position that is indeed uncomfortable. Is there anything positive that can come out of reverse split? Yes, in this case there may be. Many institutional investors have bylaws that will not allow them to invest in an equity under $5 in share price. With Sirius XM Radio at .39 cents, it is well below this threshold. Should a reverse split be in the future, it will open up Sirius XM Radio as an investment option for many institutions that currently can not invest. This is not to say that there are institutions chomping at the bit to buy. It is only saying that it makes investment into the company available to more institutions. Additionally, such activity may be a function of trying to obtain financing for the debt due in 2009. With most of the financial institutions in some sort of turmoil, the number of players that a company like Sirius XM Radio can go to has thinned out. Being able to enact a reverse split, and having the latitude of additional available shares may give Sirius XM Radio more players to deal with to get a financing deal done.
Should shareholders trust management with these new choices? That is a decision each investor will have to make. Will these items gain enough votes to be approved? In all likelihood yes. How do you let your opinion be known? Express it here, and VOTE on the proxy. If you do not vote, you are still rendering a decision. Those that do not vote have their shares voted on by the Board.
Take some time, read the proxy, research the issues, and participate in the process. These are crucial times for Sirius XM radio. This is not a proxy to simply toss in the trash. I encourage all readers to participate in this process.
Disclosure: Long SIRI
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This article has 231 comments:
That is how some penny stocks continue to thrive after a reverse split. A company with a 50 cent stock price, 1M authorized shares and 500,000 outstanding shares does a 1-10 reverse split which results in a $5 stock price, 50K outstanding shares, but still has 1M authorized. Now they can sell 950,000 more shares, theoretically, which dilutes the shares even further, and so on.
Please correct me if I'm wrong.
if Siri does a reverse split MEL SHOULD reward all the people that have bought stock and held on for so long buy letting us keep our number of shares so if you have 10,000 shares and they do a reverse ten to one than you make some money you keeep your 10,000 shares at the new price i think MEL should make a cap if you have owned SIRI stock from lets say todays date back a least 6 months or longer and have not sold you should be rewarded hell i have owned the stock for over a year and keep buying hoping to see it come back just like a lot of people are doing which i have lost 80% of what i have put in SO MEL IF ANYONE FROM SIRI READS THIS THAT WOULD MAKE THE NEWS AND ALL YOUR CURRENT SHARE HOLDERS A TRUE BELIVER IN YOUR COMPANY LET YOUR LOYAL FOLLOWERS MAKE SOME MONEY ESPECIALLY THE ONES THAT HAVE HUNG IN THERE WITH YOU!!! MEL HELP MAKE SOME OF THERE MONEY BACK !!!! and also buy doing this you would eat up alot of those shares that are outstanding which is hurting the stock as well
If there is a company interested in partnership with Sirius/XM and are really serius they can ammend their bylaws for a particular company aquisition, if their required minimum as Tyler describes is $5
ER MY MORTAGE. STEP UP DO THE RIGHT THING.I ONLY HELD ON BECAUSE OF YOU!
IVE GOT FAITH IN YOU DO THE RIGHT THING .I LIKE LIVING IN MY MODERATE HOME.THANKS YOUR THE MAN
I believe you are dead on! The ability to issues, not the actual issuance is the key element here.
1) This is a great negotiating instrument for lower interest rates for what they are now!
or
2) The proper issuance followed by a reverse split would allow for a complete payment of debt. The complete repayment of Debt would then also increase the actual profit and not just the EBDTIA number. With interest payments, and bond holders gone, the sky's the limit
--------------------- also
----------------------... GIANTS!!!
----------------------... GIANTS!!!!
I shall finish the game
Who are all these new named naysayers on here today????????
A reverse split if it helps to pay off the debt is fine. Adding the shares then taking them away in a split is interesting. Its like diluting, then removing the dilution(to a degree). If clearing debt and removing shares from the board will make the stock price go up, I dont care if it does a 1000 to one split, just go up. Get rid of your debt, and sell some fu***ing radios already.
In total agreement. they are having a hard time refinancing the debt in todays market. i think that this can be a good thing if they do the reverse and get rid of the debt.
Obviously if they can get the debt refinanced without the split that is a better option, but if they have too then so be it.
Would you not agree that the main reason this stock is so low is because of the looming debt coming in the new year?
What if they were able to get rid of that debt? Could be a positive thing
This is a .39 stock in a worldwide depression with a company in debt for billion plus due next year.
It sucks Sirius is where it is and I feel for many in the mkt place period.
Sirius is making sure it gives itself every options to fight another day.. This was a prudent move to have in place... what Mel ends up executing we shall see. One or another maybe neccassary for new credit.
For me this is a more extreme 3-5 year spec stock. I am adding money elsewhere but may buy some more Siri today for first time in month if the onslaught neg news of the last 24hours is absorbed without 4 point loss near close. (Reverse split -Holds -Patten Lawsuit) Charts had bottom around 36-38 last and this week. Hello Around 38. Currently 36.99
My average buy in .67
Your Average?
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Well, the game has changed. Can't say how disappointed I am on many levels that they've thrown this into the mix but here we are. Is this the end of the world? No but I've always been honest here and here's my revised opinion based on the new information. The company will most certainly execute the proposed ammendments. At very least, it's a hedge against not being able to find other financing. Executing these measures basically gives them a bigger slection of bullets and intruments with which to work through this merger situation--but I'm not kidding myself. I feel like this is their primary strategy. What this does to us as shareholders of the "old" regime is not pretty and as I've said, is at least disappointing. I just heard a day or two ago a trader on CNBC basically say it's an "every man for himself" type of market. SIRI is exemplifying that mantra. If I didn't know we are in that kind of market, I would be more pissed at Mel. However, I will say I believe now, he is NOT looking out for his shareholders at all. This is a much different view than I have had previous to yesterday. So how does this relate to the future for me? It changes my strategies for sure. Here's how I see this playing out. This news affects everyone equally, longs and shorts and both are going to be positioning to exit the company before the meeting. Because of the heavy short interest in the company, at some point, we will see a fairly significant pop as those shorts unwind to lock in their profits. I believe the majority of the held long interest in the company has already unwound and what is left is primarily the short. The second reported Sept number was ctually down slightly, but still fairly high at 199M. You also still have the GS short which I have to assume they will unwind as well at the time of their choosing. That may be what creates the big move and other shorts pile on top of that to lock profits. When this happens, DON'T BE FOOLED into thinking the stock is coming back to life. It is now a known fact that dilution is coming and many will not want to be part of that--INCLUDING SHORTS. So, it's hard to say when or how much but in the near future we should start to see more dynamic movements. Once the bigger players start to buy back, others will follow and start driving the price up. Their strategy will be to lock in this short side money, wait for the reverse, then hit it hard once again once the new price is established. It looks like SIRI will do a simliar deal probably with the same bond holders as a restructure--giving them a new short position after the restructure. This is what kills me. Is Mel that stupid? I used to not think so. As I've said here before, this is a classic and I'm sorry to see that SIRI is taking the route at this time. But again, maybe it's the company's only option. I will be looking for that short move, which could bring the stock back up anywhere to .60 to .80-- or even a buck depending. At that time, I will be unwinding my long position. I went through this once before with another company. They were also in trouble and I rode them down to .40. One day, they just jacked and in the course of one day, they closed at .88. At that time I was a new trader and since my basis was 1.05, I figured I would be back to even, if not up, in a few days and everything was A OK with the company. What I didn't realize then was, that move was related to the company's plans to restructure. The very next day, they were back down at .60 and then just drifted lower to about .20 before they diluted and reversed. I wound up selling at .46 of the final decline because I didn't know how to get out when I was supposed to. I'm not telling anyone what to do, just sharing my experience.
As I look back at this week something did stand out to me from Tuesday that I should have been more focused on. It was a quick thing but now has turned prescient. I liked much of what Mel said on Tuesday but what hit me in the face a little was how he said something. Rather than saying "we're talking to lenders, etc..."...he said "we're in talks with our DEBT HOLDERS and I'm confident we will be able to work something out." That was a significant thing that most people probably didn't pick up on. Now we can see what the plan is. He's going to restructure with GS, MS, UBS. Hence all the new shares and then the reverse. They have to reverse to give them a new decent short position. Mel, Mel, Mel. The best news we longs have in this is the existing short positions will most definitely be unwound to make way for the new ones.
After supporting the company and Mel for quite some time, I say again, this is a most disappointing development. Especially recently this year, I have championed Mel and believed he would do the right things for us. Who could have predicted this stupid financial meltdown crisis and how deep it's gone. Just bad timing I guess. But as far as I'm concerned the game has changed and I will be adapting to the new rules.
I do hope Sirius eventually is about content- the manufacturing I would love to see a partner come on.
I understand why some lost faith in Mel. I have not. If Sirius can make it through the next year. Game on. I believe Mel is the guy althuogh i wish Sirius was just about making/selling content and not manufacturing.
I took the two of them by the halters and giving them a big red apple to eat at the same time I explained what a reverse split was and to stop their gyrating before they threw their backs out of place. I explained that this was the season of hope.. The market is bad but this too will pass. The biggest asset that the company has is its millions of subscribers. Hopefully its CEO is not sitting around slurping on a peppermint cane. He should be going to the cash laden companies such as GOOG and MSFT. In those companies there are many young people who are listening to the satellite radio. Surely there must be those insiders who could get very interested in acquiring SIRI with their pocket change.
After a long session of consoling Donner and Blixen they seemed to agree and headed back outside kicking up their hoofs and frolicking in the snow singing "Sirius Claus in coming to town...."
Why should we vote for the board, if they do not believe in Sirius?
Is the class action in the way? MEL decieved FCC and shareholders when he said merger is needed because there will be > 4 BILLIONS in savings and synergies !!!!!!
I'm a bit confused...
If they increase the # of common shares from 4.5B to 8.0B... wouldn't that sort of negate the new shares??
I have been long SIRI for too long and have sold and averaged down 5 times since $3.00 and still have lost more than 60% on my position. Justs dumped my shares at $0.375 today and put buy orders good to cancel at $0.08 per share! I think you should too. Take a look at JAVA with a 1 for 4 split in Oct of 2007 bringing the stock price back to approximately $24. Trading down to the mid $4 range. Mel will raise capital with more caustic Convertible Prefered Shares and the shorts will have another field day smashing the stock again. Though Cramer is sometimes Obnotious he was dead on what was going to happen here. Its up to you but my thought is that we small investors to sell all our shares here and help drive the stock to $0.05 a share. Stick it to the Converatbles and then after we see the share price down again by mid 2009 after the reverse split buy it out of the rubble like JAVA here at 1/5 the price.I wrote hear earlier that Mel and the board should have done a rights offering instead. that would have made the shorts pay up, But that fell on deaf ears. Take your money and buy Ford or GM instead, at least the Government is thjier to bail them out. .
Earlier Mel mentioned that savings in synergies 400m and company to be in black next year.
If above is true then any negative impact of reverse split?
If yes then please advise on the exit strategy.
If you cant afford to gamble the money:
A. Dont play in the market
B. Stick it in a CD
C. Stick it under your pillow
D. Dont buy spec stocks expecting to get rich. Buy safe High Yeild, Large Cap stocks.
Whining about your loses hear is as asinine as risking your future on a spec stock that sells a niche product.
All Im saying is there was no sure thing in SIRI. Either ride it out and continue to play, or sell, learn your lesson and move on.
Thanks for that sound advice. I had never heard that before.
In all seriousness, I understand peoples frustrations, but I think more than not people look here for advice from folks like Relmor and SL62. It gets to be a pain sifting through repeated "I lost my shirt" cries. Everyone has an opinion and a say and by all means are welcome to it. Say it once and move on.
A better idea is to borrow from the Subs/Stockholders on a special purpose vehicle. If there are 20 million subs (a large percentage are also stockholders) and if only 10% of the subs/stks agree to lend from $1,000 to $10,000, the potential is $2 billion to $20 billion. If the average loan amount is only $3,000, then it is possible to obtain $6 billion.
Although the Administrative cost of monitoring these individual loans could be expensive, it is not more expensive than the fees paid to Investment Bankers.
The proceeds of the loan could be used to liquidate the loans to the Goldman Sach's of the world and the ecess funds used to buy back SiriusXM stocks.
If I am a Sub/Stksholder, and has invested 5M, 10M, 50M or 100 thousand shares, I have a stake in seeing to it that the company continue to be viable. I would not mind lending to the company, especially if I am given an incentive similar to kickers given to the investment bankers and a discount on my subscription fees as long as the loan is outstanding.
If the excess funds (say $3 billion) are used to buy back a billion shares, it should increase the value of existing shares. The price appreciation of the stock price will partially offset or even exceed the money loaned to the company.
SiruisXM could also approached large Asset Based Lenders like JPM, BAC and Citi and use the value of Spectrum and the revenue stream of the monthly subscribers as collateral. The investment bank window are probably still closed but the ABL Divisions of these banks are open. Depending on the valuation of the Spectrum and the monthly stream, SiriusXM could probably borrow from $1 to $2 billion.
I bought the stock as an investment. I bought the product for me.
However, I had faith in Mel and backed his FCC effort because of my own battle with the FCC. I was all about Mel and his fight with the merger. I was supprised but attempted to understand his after merger actions. However, a split of Sirus will take out all future value in my original investment of $300,000.00 and It could take 10 years to break even.
Mel knows most are invested over 2.00 a share and he knows a split will prolong the breakeven point more than 5 years. Mel does not care. Mel has no respect for stock holders and he want the company to go private.
Say NO to the Split and demand a new CEO else lose it all!!!
So your saying that people who invested $20,000 and more... only have a subscription because they have an investment... That's stupid... That's like buying the radio, paying for a subscription and throwing it in the corner because the only reason you pay for the subscription is because of your investment....
Your dumb...
I thought that these forums had people with rational thoughts... But after reading these above posts, of people blaming other people for their investment issues...and people stating facts based on nothing at all...
I have come to the conclusion that you can't get anything worthwhile for free...
So...
Good bye to all you little INFANTS and good luck with your next stupid investment....
you guys should all listen to TMF and buy stocks that are being pumped.... and hold onto them until they deserve to be thrown into the toilet...
Then you can go blame some other CEO for more of your lost investments.....
So as i say again GOOD BYE.
(Cos, SL62, Killer, Relmor, 163888, It has been fun talking to you guys... I will still hold my positive thoughts and all my shares for SIRI and continue to average down....I might come back when SIRI is back on the up swing....
Later)
There isn't any way to say that his is good news. I said months ago when we last had a discussion of a reverse split that it is a sign of weakness and the Board, CEO, and CFO throwing its common share stock holders to the wolves, The Shorts and Bond Holders.
I know we are in a bad credit market, and understatement, but Mel stood up and said that Further Dilution of the Common Shares was not on the Table and that a Reverse Split did not add value to the company. The problem now is way believe him or trust in his word. As Common Shareholders we have been Crucified by the Merger and 11th Hour Debt, and now this. I cannot defend this action but will only say that if Bankruptcy is our only option than authorizing this action is prudent to give the Board the flexibility they need over the next year.
I will be looking for short covering before the shareholder meeting and with any significant pop sell my holdings in this company. I am disappointed but will not let my money sit through this BS.
killerkaul, I want to put a positive spin on the Annual Meeting proposals but can't see how giving the Board the authority to issue more shares to facilitate the use of more convertibles to refinance debt isn't a change of heart for Mel. In doing this, he is aligning himself with the debt holders willingly. This totally sacrifices the common shareholder. The reverse split just gives the Arbitrage Play room to run after resetting the SP at a higher level, again taking out the Common Shareholder. I wish this were not true and maybe I'm missing something but this tell me that MEL has no confidence in his ability to refinance his debt for 2009 in any other way. I will wait for the 3rd qtr call to make my final decision, but absent any positive February, 2009 debt restructuring that doesn't involve Convertible Bonds, I will clear my position on short covering as S162 explained above, and wait until all this BS unfolds without me, before risking any more capital. There will be better opportunities while Sirius gets its house in order. No need for any of us to be more fuel for the fire.
Asking for an additional 3.5 Billion shares of the common and a reverse split may be what the Company needs to do to survive debt restructuring but it does not mean the we as common shareholders will survive with it.
Here is what is happening.
I was asked for an exit strategy, instead I will give you a game plan.
1. I am going to write a formal letter complaining about the proxy vote. I will be voting no, and sugggest everyone who holds shares votes no. We will lose, terriblely, but at least we will have tried. I dont give a shit about the bondholders. They arent my problem. As an owner they are against me. I want to hurt them, they want to hurt me(get max value). To hold a short on a company and a bond(uninsured(junk status)) is sometimes a risky thing(unless is a convertible bond(really the best play on ANY company if you can get free shares to hold your short with(I wish!!)).
2. Make them use the subscribers to pay for the debt, and revenue. Add revenue or dont complain to me(Im the owner, I would fire management after hearing there new idea without justification.)
As an owner I would need to hear there are no other options from the horses mouth. If so, then we can start talking about a reverse and more stock. Otherwise, no. I would call every bank in the world first before I agree to that(the board is not obviously heavy enough into the stock to care). They dont want to tap the subs with future earnings(Market sucks, money is tight, cant piss of their only source of income right now).
SL62 might have it right. Id buy in these levels with new exit to sell when it doubles or nears that. Gamble. Hope q3 is good. I am not holding enough shares to warrent a split making sense for me. I would want at least 100000. Otherwise why I had a large quantity is invalidated(writing covered calls). Im not happy today, and Im thinking of selling. So dont, cause thats when it will go up, when you think it cant anymore. Watch. Not much down left, so why sell now.
Heres a side theory.
Anyone think it strange there are too many pro analysists on this stock and only one negative, and hes always right. Just a thought. And he works from the company holding bonds against it and have the most to gain from the stock dropping. Hmmmmm, I think I know who to sue if I were to sue anyone.
matto, that you type that nonsense for everyone to view speaks volumes about who you are as a human being.......... just what everyone here needs to read giving the incredible impact the market has had on everyones investments..... keep spreading your "cheer" where ever you go and I am sure you will be given what you so justly deserve.
And sure, it's a desperate attempt by Sirius but they're pretty much out of options. They need the stock price up to prevent being delisted. Siri at $0.37 is a screaming buy for someone just getting in. And I agree with the author, reverse split the price to something over $5 per share to attract institutional investors. Institutions are what drives up SP, not peon retail investors.
And look at SIRI's market cap: $1.19B!!! That's a steal for a company that will soon be a virtual ATM machine. When these were separate entities combined market cap was well over $6B a while back. Siri will raise the cash in my opinion to service their debt obligations coming up, and when they do, it's just sit back and wait for positive free cash flow and profitability and a market cap of over $6B (in my opinion within 3 years).
Some people just don't realize the CASH COW that Sirius will become after they get over this bump. I feel sorry for the first investors in CDRD, SIRI, XM etc. who have lost tons of cash in SatRad over the past 15 years if they bought and held. But after all the billions of dollars thrown into building out the SatRad infrastructure over the past many years, getting out now or not buying now is like arriving at a huge fireworks display 5 hours early just to get the best spot for viewing, then leaving two minutes before the first firework takes off.
Look, the FCC first issued the two DARS licenses to Sirius (then CD Radio) and XM back in 1992, 16 years ago. Sixteen years of getting the infrastructure in place and still no profitability to date! Finally, Sirius is within a year or two of it and no one wants to touch the stock?! It makes no sense. Think rationally folks and put your emotions aside.
Good Q3, and market rebounds. Stock trades at .85 cents.
Reverse split at that point. They need to show value, and the ability of this stock to go up, so they can sell the stock at the best price possible. If your going to sell stock, you sweep up, put fresh paint on, and fire your auditor(oops did that slip out...)
Then you show great numbers, issue stock, reverse slit and sing the marry blues. Then the shorts come back and ravage this stock, as the MSM media sings its praises. This stock goes up when the MSM loves it, to get you to buy in. They will sucker new stockholders like that. Long time before they clear there stock hurdles but a light is at the end of my tunnel. I am buying down one more time, when it nears .70, im out. Period. Im going to make my end game gamble on this possibility....
I see a way out, and its now while its still at .37 cents. If your looking at 3 dollars by christmas now, or even 2 your dreaming. Take the .70 or ,80 cent like sl62 says, and get out. Or if you dont or cant, sell out that money you made on the doubleing(I think it has a good run left, like I said, it nees window dressing(MM's will let it run up as part of their deal to get the stock and reverse(they are licking their chops on reshorting this stock.
See
www.deepcapture.com/th.../
That's it??? It's over???
Is there not even a little reason to have hope???
Through everything up till now we beleived in Mel because "his reputation is on the line", he's brought the company from 600,000 subs to 19 Million in just 4 years. He did the merger that couldn't be done which gave total controll to SIRI....."SIRI has all the content and content is king"............ "there's no reason they won't get refinanced because they've never missed a payment, the debt holders would WANT to extend the terms for a company that's producing"...............
I could go on and on about every conspiracy theory that's been discussed on these boards................... now, it's all of a sudden over?????????
Mel's not doing this just as insurance for a last ditch effort incase the worst case happens with the economy (depression)?????????
He's not doing it as a bluff to help negotations in some way with banks, creditors, bond holders????????
He's not doing it so he can dilute the stock to PAYOFF the February debt incase he doesn't like the financing options???????? (which by the way, would almost be the same thing as taking an investment from the shareholders to pay off the debt which has been suggested here many times)
NOTHING?????
Just all of a sudden, today, MEL SUCKS???????? MEL is a liar???
I don't get it, nothing has changed since yesterday. They just filed for approval to do these things. They haven't done them yet nor do we know the reason if they did.
What happen to,,,,, "Once the bad 3rd Q is behind them the good news will come, the shorts will cover on the refinancing news, the advertising will come for Xmas and the 4th Q will surprise everyone"?????
I'm sorry but bad economy or not, I can't see how they don't add 2 million subs between now and Xmas......You don't think advertising is coming for Xmas???? Of course it is............Why the HELL would they spend ANY money advertising now??????? NO ONE is thinking about Xmas right now nor is anyone thinking about spending any Xtra money right now......Everyone is scared to death of the economy news.........But, no matter where the economy is (which will have settled down one way or another after the election), Americans always spend money on Xmas.....
Maybe I'm just the last sucker on the sinking ship. I've been tortured by this stock for years just like many of you. It's never been a gamble for me, I've also been a sub for years too.
Love SIRI every second of every day as a listener and wonder how non subs get by with out it, then curse SIRI stock that you beleived in.........We're all going to need therapy..
I didn't buy today as bad as I wanted to, but I'm sure NOT selling.....
I've got almost 10,000 shares averaged at about $2.15............What is $3600 going to do for me???
SO, here's what I'M going to do.....I'm standing at the bow of the boat and throwing my $3600 and the BIG BLUE DOG overboard and not looking back (now I'm gambling). I hope they can swim.....................
I'm also taking the advice of "Well this might be SIRIUS" and not coming back to read about this everyday. I've made my decission and I'm moving on.
RELMER, COS, KILLER, SL62,
You guys have been a wealth of knowledge and I appreciate your efforts..........Good luck with your decissions.
Come on BLUE DOG, get your life vest on.......................
I wonder if we will hear 4th quarter results before they do anything crazy, if so I will stick with it hoping that the market does a reverse.
Seriously Depressed makes the most sense today. What good is the 3600.00? Down from over 21000.00, there is not much left to lose. But then again, what if it works out? I'm down 25.000 at this point and it is not the end of the world. Whats another few thousand. I had it to lose, but I haven't lost til I sell. So as long as Sirius does not go bankrupt, I will be long Sirius, no matter what.
The first is the Dilution of Common Shares outstanding by the use of Convertible Bonds to refinance the 2009 outstanding debt due in Feb and December. This along with authorizing the expansion of the common shares outstanding to allow Convertible Arbitrage by the bond buyers to entice their sale (the shorting of the stock to hedge the bond against default) is of itself the worst of the two issues. This is what happened in 11th hour to get the merger done. The convertibles themselves create dilution at maturity if the stock's convert price is attractive, but to add shares outstanding and then lend them to short the stock, contrary to every long shareholders position destroys our long position. We are experiencing the result of the merger financing now along with the 2009 debt overhang. This first issue alone if executed by the company to refinance their debt would be enough for me to find an exit strategy.
The second issue is the Reverse Split of the Stock: If this was the only issue and the 2009 Debt could be refinanced or restructured without the use of Convertible Bonds I would not be as concerned. Authorization does not necessitate implementation. It would be a tool for a merged company whose debt had been dealt with in a health manner for the Common Share stockholder. It could be used to satisfy Nasdaq listing criteria or to attract new Institutional Investors or Both. It also would remove a lot of dilution already created by the convertible bonds of the pass. This along with the Lent shares returning to the company at Con Bond maturity would go a long way to protecting the Common Shareholder from being exposed to Short Seller manipulation.
For Me sadly enough this is not being proposed by itself which is why the alarm bells are going off for me and others. If the first issue is executed and Convertible Bonds are used to refinance the 09 debt, they will have a hard time selling the bonds at the current stock price because Shorting the Stock while buying the bond gives little protection because the SP is already so low. That means that the Reverse Stock split will occur to reset the SP and give the Convertible Arbitrage room to run to the Bond Holder, devastating the Common Shareholder. Now Nasdaq rules might be the reason given, but the scenario I just described is what will happen if Convertible Bonds are the solution to the 2009 refinancing dilemma. The Common Shareholder, US, you and me, will pay to refinance the debt without even a Thank You.
What IF none of the options are excercised?
There seems to be an awful lot of IF's at this point.
I suppose only time will tell.
Long Sirius
siriusbuzz.com/merrill...
I hear your outrage. This is a tough thing to swallow but a few thoughts...
Today, or yesterday @ about 8P when I read the filing, I was very disappointed in what the company seeking to do. Never thought they would go this route. It's not what Mel said and you have to take someone, like I believed him to be, at his word. I have to say, as cos1000 and relmor are saying, some things are just not adding up at this point. I think what bothers me most is that the company "waited this long," in quotes, to seek financing or get it approved. The merger was executed on July 29-- we know and were told "in an ugly way." From what Mel said himself, that he would make the shorts pay, I was led to believe the company would be hard at work securing new finaciers and that the convertible deals would be taken care of. I was led to believe that the ugly financing was an 11th hour "easy" wasy to get the deal done--"now we'll get to work getting something permanent in place shortly." I was expecting that by NOW, that we'd be getting the good news that Mel would make it right for the shareholders--those he SAID he cared so much about on Cramer. Rather than this f'd up filing release, I was expected this very release to say something like, Sirius In Preliminary Talks to Resolve Short-term Debt Issues Through New Lending Facitilty. That was the headline I thought would happen mid October (or to be honest, not long after Labor Day. 4 weeks in August should have been more than enough time to get something in place. Mel said he only did the deal with GS, et al, because he had to get the thing done "overnight." And at that time, there was no credit crunch. That second deal should have been done, bonds payed off, shares returned, stock goes up--done. At that time at the end of August the price was still over a dollar and that should have been it. The fact that we saw .90, then .80, then .70, then .60, now .40 is sad. I had no problem going with it based on 10 years of history, company vitality, etc...I would wait here at .30 if I knew a REAL finance deal was being sought--I do not. Mel has made me and others look foolish--I have no choice but to admit. What it tells me (knowing what we do now) is that Mel was in on this whole thing-- our conspiracy theories were well warranted--I just didn't believe Mel was in on it. I no longer buy that they can't finance because of the credit crunch. This WAS the PLAN the whole time.
As I was going through the filing, I re-familiarized myself with Mel's holdings--and as we all know they are extensive--well over any other director or board member. As I was looking at that, his buy of 2M shares early on in the game hit me. We all looked at that as a show of support from Mel...but I now can see the probable motivation for the buy. Duh!!! It was to keep shareholders in the game!!! 2M shares for him is NOTHING (which we all knew at the time) but now it's easy to see why he did it. What else was going to keep all of us from jumping ship too early? Just look at the sequence of events. He's not stupid and we all WATCHED Cramer confront him in front of millions on TV that the bondholders were going to short the common into oblivion. What else could he do to keep the stock from tanking overnight (or in a week at least) by all us longs jumping off. Then no more money would have poured in along the way (without his vote of confidence buy). All of us wouldn't have averaged down, no new investors would have tested the waters. Without Mel's buy of 2M, immediately after Cramer blew the lid off the game on TV, it would have been game over for what has transpired. Plus now with this horrendous anouncement part of the plan--which he knows is kicking all our asses--his 2M buy protects him legally. He can easily deny premeditating this by saying "Look, I bought 2M shares in good faith!" He knwe there might be class action suits for killing the common--we'ver seen this happen so many times! Look for teh class action suits to start popping up right after the shareholder meeting. This company is in for troubled times next year to say the least. This is why people have asked, what? you're just giving up after all the cheerleading? Well, I NEVER EXPECTED THIS!! I can't ignore what I see. Sirius XM is itself now turning UGLY and toxic as an investment. And you don't hold toxic investments. You pick your spot and exit. I also now believe by doing this new deal the company will be in jeapordy of failing either next year or the following. They are continuing down the path with the devil and it WILL catch up to them. We got played here--big time. We weren't the only ones btw...I read several articles of people who thought SIRI was a great imvestment in their current situation--Tim Brown (the ex Raider), a few on TheStreet.com, even TMF wrote a few articles in Sept. saying these guys look attractive. Sure, because all the signs were there INCLUDING MEL'S PURCHASE. But now we can see that was just a ruse. 2M shares for him is play money when you're talking about 1B of top line. Relmor and Cos also said it right that Mel has always only been interested in the company's survival. He knew all along that he was going to restructure the bond agreements with the same players. Him being mad about ugly financing now is just a joke that duped a lot of people--including many of us here.
No company I've ever heard of ratifies an increase of 3.5B shares and a reverse split without using it. This morning I thought this was just a hedge or option--but it is becoming clearer and clearer that this was all part of the plan. Mel sold his shareholders a bill of goods to keep us on board while his plan got executed. He/they needed the SLOW attrition, rather than a freefall in a week. They needed our new money coming in both to support the stock short and to keep the company looking viable--and don't forget all those who have jumped and will jump now, give their money to SIRI. We all got played. You can hear it in the words of his last interview this week. ALL he cares about it getting to the positive cash flow because he knows that's what will make everything alright for him and the company an d people will forget about this period right here. He's a vain man and all he cares about is success. I under-estimated his motives. Sadly, he is just like any other contriving CEO. What he's doing now confirms that his "ugly financing" was a ruse. He new it was the easiest for the company to do it once, then do it again. There is NO DOUBT in my mind that he had to show us being on the level by doing a bank or proper lending deal and not doing the stock issue or reverse. He failed that test. This is a typical cowards game and though I'm shocked he's doing it, it's real.
I will say though, I have changed my opinion based on facts. There are people here who now say I told you so, but did that based on obviousness--i.e.. the stock goes down, they're heading into bankruptcy. A lot of subgenius thinking for sure. As it's turning out, many of us here were actually the right ones because we called the conspiracy. We just didn't know our most important player was in on it. That's what has blown the whole thing up. So dudes here who say they were right and we were wrong, were LUCKY...but nevertheles right.
You ok? Looks like the blue dog has turned up abused by it's owners--Mike Vick style...not good...hang in there.
Hang in there. Sorry things have turned against us here...Thanks for all your positive vibes. Come back and check in sometime...
There's two things that I can't get past,,,,,,,,,,
1. Is Mel REALLY going to end his career orchestrating such a scam that hurt so many people???? Howard too for that matter, he's devoted to beating regular radio and the success of SIRI???? Their lagacies are on the line and they are arrogant enough to care about how they're remembered.
2. Has everyone accepted the fact that we're not going to produce new revenue and succeed???? New products are out, new services are out. We're so close to turning a profit. A good Xmas could mean 1 mil new subs which could solve everything??????
It appears that way...I am shocked myself. As stated, I have always been a believer in Mel, but the evidence is overwhelming that he was in on this. The Cramer interview, the mysteriously buying shares (that is the biggest tipoff now as we have the new facts), him waiting this long to get new financing in place. What he's doing IS the easy way out for company's to cover up cracks and chinks in the armor. What you say is true but remember there are two sides to a public company: there business side and their stock side. If EITHER of those two are out of whack, the company will not survive as they once were.
Someone mentioned Priceline.com. Sirius is NOT the Priceline model whatsoever. A reverse is going to hurt this company and badly. I really now think Mel is out of touch on this fact becasue all he can see is being profitable, being profitable. It's almost as if he's trying to will it to happen and engaging in tenuous practices to get it aka making a deal with the devil. This will never work. Through this dilution, he is going to alientate the other part of the financial community he already has not. Too many people already want to see Mel fail. He will be growing that list 1000 fold.
As far as Howard goes, we don't know how that will play out. Assuming he had no insider knowlege of this (which would be Martha Steeart kind of illegal), I assume he is not happy right at this moment. Unless his shares are preferred or something, he will be diluted just like everyone else. Mel is REALLY going out on a limb by doing this. I used to think he cared about his legacy and I'm sure he thinks he does. But by doing this move, he is jeapordizing everything. Just look at the collection of Wall Street and business titans who fell to obsession and delusion. People like Bernie Ebbers who grew MCI Worldcom from his garage only later to do a perp walk. It's greed and obsession. I think Mel is so obsessed with success on this, he will do anything to get it. In the meantime, he's burning his own house down. I think we're looking at someone unraveling in real time. Look at the merger as a great example. He made a deal with the devil to get that deal done--obsession. Did he have to do that deal? If he didn't think he could get the right financing, why do it? Why not just keep growing Sirius Satellite Radio within your original business model? Could it be just like the housing crisis? How many people bought too much house only to collapse under the weight of the debt. Well have to see how this all pans out for SIRI and Mel. Right now, it's not looking good to me. It appears what he's trying to do is do all of this with paper money and on the backs of people like you and me. That my friend is a DANGEROUS way to go....I always believe a sound public company uses a healthy combination of legit lendng facilities and capital raising through stock sales. Healthy between real debt and fake debt. Looks like Mel is trying to go all fake debt. Maybe next he'll get into CDS's!...
On the other hand, a few knowledgeable posters above also caution to wait for Q3 to sort out and for the Q4 forecast--so I will hold.
On the proxy, I am undecided about which way to vote. On principle, I may vote no knowing a majority of such votes could pave the way to BK. If we get "put down" as a longs, then I think it only fair to sink C-level insiders we trusted, make them publicly suffer through the shame and humiliation of failing, and of having to explicitely declare that they have. If the double dealing above turns out to be true and Mel abandons us, then It would be worth my remaining 25% to see him become the butt of bankruptcy jokes in corporate suites and board rooms throughout the United States.
Others have shared some of their feelings above. It is understandable because this board hosts a community of justifiably dissatisfied longs. My main regret is giving in to thoughts about what could have been. Could have sent my daughter to a decent university on modest gains. Could have paid off my mortgage, could have retired nearly two years early, could have bought a good used Ketch that I have always dreamed about owning and sailed blue water. Could have....
To keep this brief, I remain long but not "way long" as I have previously posted. I am reverting from investor to trader. Above, the term "exit strategy" sticks in my mind. Exit--but not yet, not until the smoke clears and a decisive move can be determined.
Regards to all retail level longs and even to the retail level shorts who play by the rules and that have traded jabs with us longs. Investing and trading remain in my blood and I know that, if SIRI has taught me anything, it is to steer clear of such stocks going forward.
(PS: I am "PM" on SiriusBuzz and "PMO" in the SiriusBuzz stock forum.)
Flood Mel with letters; tell him you'll be at the meeting in Dec . . . tell him you plan to vote "NO"
Organize, unify . . . get strength in numbers; a lot of sharp minds here; at least get a pound of flesh from this guy . . .
this company is kinda like harley davidson , a ton of the coustomers are equity owners also, and loyal ones at that.
we need to come together, huddle up and ask mel what the f%^* is up and lay it out or we'll lay you out!
Long Sirius
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my take on your comment. It appears to me there are only two real possibilities regarding SIRI's current debt issue.
All now in hindsight of course...
1. As stated and what I truely now believe, this "next generation" shareholder dilution was the plan from the beginning. And here's the what I think is the undisputed logic. In entering the "ugly financing" (I now hate that term) they HAD TO UNDERSTAND what the bondholders were going to do to the common--aka, he didn't need Cramer to tell him that. They had to know because they're the ones who GAVE them the new bogus shares with which to do it. Any company worth its salt, IF they intended to only be in "the ugly financing" until they could arrange for "proper" financing, would have had that done by Labor Day (btw...which is what I was led to believe when he said "there will be good news right after Labor Day). Mel even said on Cramer that the reason they did "the ugly financing" was because there "wasn't enough time" to go through the "proper" financing channels. OK. I bought that. Sounds reasonable to me. They HAD to close the deal before some potential injunction, you do what you have to do. A deal with invstment banks using all stock is quick and easy. BUT. You now have to ask yourself. With the deal being held up for so long, you would think they already had "proper" financing in place to pull the trigger when it was time. This is what now makes no sense whatsoever--ahhh, unless the deal you had set up ALL ALONG was with the investment banks. It had