Can the Sirius XM Shareholders Rescue the Company? 27 comments
Julia Boorstin
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At Sirius XM Radio's (SIRI) annual shareholder meeting in New York Thursday the company announced results on measures to help the company. The company tells me that shareholders "overwhelmingly" voted to approve two measures to help the company face $1 billion in debt due in 2009.
Over 75 percent of shareholders voted to approve the issuing of up to 3.5 billion shares (the company currently has 3.2 billion shares outstanding) in order to allow possible debt for equity swaps. That same 75 percent plus majority authorized an alternate plan to help the company -- a reverse split.
With the company's stock trading at around 14 cents last time I checked, this could help the company avoid delisting. The Nasdaq has a rule that its listed company's shares trade at $1 or higher, which it's waived until Jan 16. Unless Nasdaq continues to disregard that rule, SIRI stock needs to boost up its stock price to avoid getting pushed to the pink sheets.
What's next for the satellite radio company? Having a monopoly on the space clearly hasn't been enough to solidify its business. Miller Tabak + Co. analyst David Joyce says he expects the pullback in consumer spending and the drop in car sales to hurt Sirius XM's subscribers, now expecting just 460,000 new subscribers in the fourth quarter. James Ratcliffe, Barclays Capital's analyst, expects the company to refinance its debt with both convertible bonds and straight debt, so it won't have to issue all 3.5 billion shares the vote approved.
WIth the holiday season a crucial period for people buying the satellite radios and signing up for the subscriptions, we'll see if satellite radio is something consumers consider disposable in this economic environment.
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This article has 27 comments:
Sirius is a buy anytime now....
I will buy probably friday night or monday morning.....
Market should rally into the year now.....See if it helps....Feb not too far off now....Cant see too much down potential from here...I waited to buy till after the news of today was a non event for the SP, just like I thought...
I also agree that we will see the dilution soon and maybe never see a split.
Are the shorts waiting for the dilution to see what it does to the stock?
What do you see the market cap at after Q4 report?
thx.
But I do not agree that those currently shorting are troubled by today. It is all good news for them. The SP is going to go up after R/S giving them more room to short. A big payday will follow the R/S. Everytime a long buys the stock it is borrowed by a short. What will the longs do after the R/S and the price begins again to fall? Will they ride it down again? The shorts are betting that eventually the longs will all sell and then and only then will they be forced to cover.
On Dec 18 04:25 PM wcorowitz wrote:
> iF THEY RS, i'LL BE THE FIRST IN LINE TO SHORT THIS STOCK. They won't
> get me on the second go round!!!
what makes this whole scenario work is the insane number of share issued.
Sirius can never stop the shorts without reducing number by other then R/S. Since R/S keeps the same value of shares Buying back shares increases SP and would counter the short strategy. (because longs would not be buying more shares)
Something will have to change somehow.
* JPMorgan and Evercore working on overall financing plan
* 3 areas of activity:
. . . * Operational improvements
. . . * Existing debt holder discussions
. . . * New investor discussions
* Looking to complete all by March 1
ON THE SPLIT
50 * .14 = .70
What good would a 50 to 1 do? Delisting is still uder a buck when re-enacted! This action will not occur until the debt has been resolved and the price starts going back up.
ON DILUTION
Issuance of sock on the already shorted SIRI would not be in favor by financials. They want equity! The bankruptcy of SIRI would still get them money back if they were bond holders. Stockholders would get bubkiss!! The majority of the debt will be refinanced bonds! Verry little will be in the form of stock issuance.
SO. . . . . . .
We got less than 72 days until the Sirius Debt news is known. . . .
and then we have to wait for the economic 90 day Obama report card by the media! That would push it out until April 22nd.
As long as people buy the shorts will short. At some point the light will go on and people will stop buying shares. This is when shorts are forced to cover.
It's longs buying stock that keeps the shorts in the game.
Now what the longs keep waiting for is the SP to shoot up and screw the shorts. But since they keep buying to lower their avg price they keep fueling the short interest. How much the shorts reap depends on how long we keep buying. Once the pressure on stock is "sell" the shorts wait for bottom and then cover. (right now the SP is not moving the shorts are not interested in that .14 they are looking for the 6.50.
There's just a bunch of bull shit running crazy on this board. None of you know anything.................
Bababooie has a great line up of points and seems to have it all figured out until you see that he isn't smart enough to realize the math on a 1 to 50 split. Not only bad math, but then he creats an arguement supporting the bad math.....................
Mogami has it all figured out too.............where were you on the short strategty 4 months ago.................If you really think they'll do a 1 for 50 split your dumber that you sound....................
If you think in Dec 2009 there are going to be 4 to 8 billion shares your dumber then I sound.
The company will be rosey in Dec 2009 no debt and less then 160 million shares.
If they do as your "facts" say and dilute to pay off debt,,,,,,,,,THEN, the bond holders will be paid off eliminating the shorts...........SO,,,... coing to continuing shorting it as you say??????????????
How's it going? No surprises as far as I am concerned at the shareholder meeting. No real announcements. Just confirmation the Evercore and JP Morgan are working on restructuring debt by March 1, 2009. What is more important is what wasn't said. I think they will take the Feb 09 debt out with cash because the debt deal that is being worked on is due done on March 1, and the Feb 09 debt is due before this. The March announcement will wrap the rest of the 2009 debt up using, as said, new investors, renegotiated bank notes and facilities for May 09 (250M & 100M) debt, and renegotiating the Dec 09 debt (400M) with some type of Convertible Bond to the 10% Note holders.
I will also Speculate that I believe that Mel will renegotiate a portion of the Ugly debt in July 2008 when doing the Dec. 09, debt. My reason for believing this is that the Merger took on 700M of XM's debt at 13% and 550M, 7% Convertible Bonds with Lent SIRI Shares (the ugly debt) and XM's, while extending 400M of XM's 1.75% Convertible bonds to Dec. 09 at a new 10%. We all hear about the 550M being the ugly deal because of the Lent shares. The fact of the matter is that the renegotiation of XM's $1.65 Billion worth of debt at the time of the Merger was all an Ugly Deal that needs to be dealt with to reduce operating costs on interest and the amount of shares outstanding potentially shorting the stock and devaluing the company's Market Value. All of this paper is able to be paid off at the company's option at any time, hence the possibility that there is a "New Investor" as part of the company's Debt Solution. JMHO.
"it's going"
I couldn't stay quiet any longer...................
I like your idea of paying the feb debt in cash.........1st....th... still will not say how much COH they have???? It's got to be over $500M...2nd..that is probably the only play that will put some fear in the shorts.....3rd..it is exactly what everyone is saying they CAN NOT do,,,,pay debt!!!! Are they really willing to part with the cash though????
What do you think the next play is?? Anything before Jan 1??
Since they did not purchase shares they don't care about R/S (they are not keeping shares for increase in price but selling them to recoup their loan money)
So it is true the stock will have real value in 2010 but if you bought before 2009 your still going to be on the minus side. And unless you do alot of avg down you'll never recoup.
The only way for exisiting investors to get their investment back was for Sirius to reduce outstanding shares by purchasing them. That is why I say shareholders who voted for R/S are crazy.
If you buy Sirius in 2010 you might not lose everything. If you bought in 2008 or before you paid for the restoration of the company in 2009.
The shareholders voted for the most simple solution for Sirius. Issue stock-payoff debt-R/S back to logical numbers-fresh start
However that simple solution costs them everything except what they hold on day of R/S
They don't have to do anything with the outstanding share authorization except register them tomorrow. They will only use authorized shares as are needed to Assist in paying down debt, such warrants, shares lent to short on convertible debt, and shares for cash. The end result of shares used will then go into the outstanding shares on the market. For instance before today's meeting they were authorized 4.5 B shares and had only issued 3.5 B of those shares (restricted and common outstanding) or a total of 78% of the shares authorized were in fact, Issued. Your assessment of the R/S and who is underwater or not, depending on when they bought their shares, is fairly irrelevant, to the equity moving forward. Your assessment is completely void of the conditions On-The-Ground in 2009. Do they pay off or secure all 2009 debt? Do the Auto Makers survive? Does the company's balance sheet, income statement and Free Cash Flow condition improve? Where will the Stock Price be if the debt for 2009 is removed as a concern by the end of Q1? What happens when the Interoperable Radios become available to the Retail Market? If the stock price goes over a $1 for a period of 10 days and the clock for delisting restarts, why RS? I don't know but it seems way too cloudy in my crystal ball to be able to determine who is in or out of the money in 2009.
Unfortunately I, like you, am not optimistic in the short term. Everything other than the outstanding Short position that needs to be reconciled at some point is against the SP. A weak consumer getting more risk adverse, increasing unemployment, the prime market of US Auto makers and foreign automakers facing a severe downturn, weak credit markets getting moderately more stable but still risk adverse, a new administration wanting to rebuild infrastructure including WiFi everywhere, and a company looking to settle around $1 Billion in debt next year.
Now having painted that dark picture of the current reality, this company is still growing subscribers and revenues while reducing operating expenses. There is no where Safe for an investor to put their money right now without taking a loss for doing so. That means without Real Estate, CD's, Treasuries that all of this cash sitting on the sidelines is just waiting for a signal to get back into equities. Not necessarily Sirius, that would be hoping for too much right now, but if any of the metrics in that downside of the economy effecting Sirius directly were to change, then maybe some of this cash combined with a ton of short positions would bring us over a buck by the end of the 1Q. As debt gets taken care of, and the RS is not used immediately as many fear, investors may slowly find favor with this company again. I don't see anything short term that will meaningfully move the SP. Maybe a small move if the Autos get a bail out, but automakers existing without any movement in growth from them, is not news that will last. IMHO.