Sirius XM Works Hard to Reduce February Debt 83 comments
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In an SEC filing Monday, Sirius XM Radio (SIRI) announced that they have agreed to issue an aggregate of 108,100,000 shares of common stock in exchange for $15,640,000 principal amount of the 2% Convertible Notes due 2009 (the “2% Notes”) beneficially owned by institutional holders. The move brings down the February debt, which was once at about $300,000,000, to $193,588,000.
The company executed these transactions to reduce debt and interest cost, increase equity, and improve our balance sheet. As before, the company stated that they may engage in additional exchanges in respect of their outstanding indebtedness if and as favorable opportunities arise.
What is interesting is the size of this pay-down. The company is pursuing refinancing, and there are a few differing holders of the debt. This is the fourth such pay-down since the merger was announced.
In addition to the debt issue, the company announced that on December 19, 2008, James Rhyu, their Senior Vice President and Chief Accounting Officer, informed Sirius XM Radio that he expects to leave the company in January 2009. The company understands that Mr. Rhyu expects to be appointed to a senior financial position at another company.
The Audit Committee of the Board of Directors has appointed Adrienne E. Calderone to serve as acting principal accounting officer. Ms. Calderone, 41, has been employed by us since August 2006 as Senior Vice President and Controller.
Position - Long Sirius XM
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This article has 83 comments:
"...employed by us..."
Tyler, are you speaking as an employee or as a shareholder?
Those people who purchased this stock at over 2 dollars "work hard" and now they have nothing to show for it, and probably never will....Those people "worked hard". Did you "work hard" when you were writing this article...I doubt it...
Its not hard Tyler to call you "unsophisticated investors" and ask them to do what you failed to do....Make this company work without destroying investor equity....Mission FAILED.....100 percent failure...This merger is a joke, and criminal...And one day if it comes out it was criminal, everyone on the fringe to people in the media will be questioned....This is a 3 billion dollar theft that will probably go unpunished....From the SEC to the FCC, to the media, Jim Cramer, etc....were all in working unision to convince the masses that Sirius once merged had enourmous equity value....Its called a conspiracy to committ fraud, and its a crime...So work harder, and uncover that story, not the bs your write...
If you issue stock to raise money, as a CEO, you should be fired immeditely...Unless your a new company....If a bank wont loan to you, then you probably dont have a viable business plan and shouldnt exist...So if you ask shareholders to bail you out, you should be fired that day, as you FAILED... Kind of like a field goal kicker who misses every kick...How long would you keep him?
I loved this post. You say it like it is......from the heart. And, I couldn't agree with you more. Please keep it going. I look forward to your comments!
On Dec 23 08:01 AM relmor wrote:
> Working hard? Are you kidding me? How is issuing shares and giving
> them away to pay off debt working hard? Next your going to tell me
> the FED is "working hard" dolling out money...Its not hard to hit
> a number on a computer screen"future work units" and transfer them
> to another computer screen....So did that banker "work hard" too.
> Tyler, let me tell you who "worked hard". The thousands of people
> who go to work everyday for a company than couldnt give a rats ass
> about them, overbudgetted and mismanaged their way to the unemployment
> line at any moment...Then these people listen to people like you
> and Jim Cramer who are dumb, and think that it would be easy money,
> get in early on this great merger...Maybe I can work a little less
> hard, kind of like my boss...Who gets paid a fat check to decide
> wether I am a "viable" part of this companies future....
> Those people who purchased this stock at over 2 dollars "work hard"
> and now they have nothing to show for it, and probably never will....Those
> people "worked hard". Did you "work hard" when you were writing this
> article...I doubt it...
> Its not hard Tyler to call you "unsophisticated investors" and ask
> them to do what you failed to do....Make this company work without
> destroying investor equity....Mission FAILED.....100 percent failure...This
> merger is a joke, and criminal...And one day if it comes out it was
> criminal, everyone on the fringe to people in the media will be questioned....This
> is a 3 billion dollar theft that will probably go unpunished....From
> the SEC to the FCC, to the media, Jim Cramer, etc....were all in
> working unision to convince the masses that Sirius once merged had
> enourmous equity value....Its called a conspiracy to committ fraud,
> and its a crime...So work harder, and uncover that story, not the
> bs your write...
I hate to keep bringing up the merger debt but, it was Mel that took on $550M of New debt at the time, while loaning shares of the company (our company), to Bond Holders of this debt. 260 Million shares to be precise. So that these New Bond Holders, not anyone else, could Short the stock. He called it “Ugly”,….. and I have learn to call it “previously undisclosed”.
With the stock price where it was at the time, we were not even able to Hedge our own long position by Shorting the stock ourselves. This convertible bond debt was additional debt, added to the balance sheet without shareholder knowledge or any discussion that it would be needed to do the deal. Then to add insult to injury, he used existing share holder equity to support the issuance of this debt, immediately reset the stock price to $1.50, and then loaned the shares to the new Bond Holders to further diminish shareholders equity. This Sophisticated Convertible Arbitrage, having Bond Holders short the stock mercilessly down to current levels, is All Mel's -working hard- for us common share holders..
Many thought the deal, after so many months of DOJ and FCC inaction and deterioration of SP for both companies, was too expensive as previously established, but add this New Debt and the Toxic structure of it to the pie, and here we are. The recent multi-billion dollar write down in Goodwill is as far as one needs to go to see if the value paid is the value assigned after the merger.
So in this Holiday Season, the hope for a miracle is about all that is left while further dilution continues. Company silence regarding future plans are adding to insecurity among us retail investors. The SP is holding around .12 because the Pie has been cooked, and the dilution is already there. So please lets hope for what's left of our Hard Worked dollars, that there is still a miracle left in this company's future. Work Hard Mel because we deserve better than the coal in our stocking that you have left for the loyal shareholder so far..... ho, ho, ho.......
very well said my friend.... he took his eye off the prize and cost everyone a lot of real money. running a merged company wasn't the goal. running a successful one, that rewarded shareholders for their investment and trust was suppose to be.... he chose the bondholders over the shareholders and now we're left wondering what happened.....
I have a feeling that for many CEO's......, Pinstripes are going to be back in style next year when the investigations are over.....
----Sirius XM Working On February Debt------
The changed title was a twist, Working Hard, by Seeking Alpha is my guess
Assuming there will be a billion more shares issued for debt and the shorts hold on as long as they can, at what price do we start throwing everything on the ranch at the stock?
(My dream scenario is Sirius uses stock to payoff debt and then rebuys stock dirt cheap. Then they continue to rebuy all summer and use more stock for Dec debt. Then the short stocks are all reclaimed and burned. No R/S but plenty of issues for debt followed by repurchase)
On Dec 23 12:53 PM cos1000 wrote:
> By the way, in all fairness to Tyler, this article was taking off
> his website and the title he gave the article was:
>
> ----Sirius XM Working On February Debt------
>
> The changed title was a twist, Working Hard, by Seeking Alpha is
> my guess
further comment unnecessary.
I didn't buy stock because of these opinions. I won't sell because of them. What I really like at the links to other data found here and I listen to all sides and then make up my own mind. The stock market is no place to gamble money you need to live on or for your retirement. there are safe bonds and CD's for that.
I admit I want to profit from this. I am not in a hurry. Personally I think asking for more shares to issue was a wise choice. I think that is the stockholder-company relationship. The company says "in return for your money today we will try to give you profit in future" There is no profit in a stock until you sell it. The main issue of course is investors who have seen the SP decline to where they cannot see it regaining the lost ground.
All traders need to be able to accept that not every trade is a winner. No investor should put everything into a single stock and certainly not a speculative stock. While I don't think Sirius management has done a very good job I don't think it part of a conspiracy. (more like complacency)
The path out of this mess I was hoping for was increasing SP and using shares for debt but rather then reverse split I was hoping for company purchase of shares in future. I would not allow creditors to short my stock Period. Issue the shares and they have choice. Hold for more value later or sell right away.
This is pure investor-company relationship. Company tells investors their current SP is going to decline but as a result the future SP will exceed their investment. Sirius never did this. There was no disclosure other then safe harbor that states "you might lose it all"
However this prevents any one here from claiming "Mel fooled me"
While I have read price averaging is a waste of money I intend on dumping more into this stock because independently I have came to the conclusion that the SP in 2009/2010 will be higher then my buy in. I buy more because I think in the end I will gain more.
Concernig other opinions found here. I am in a profession where it is important to listen to bad news and other opinions and come up with a course of action that allows me to accomplish my mission. I would rather have good data that tells me I have been wrong then bad data that has me take a wrong course. The first reality check of an investor (gambler) is "can I afford to lose" If the answer is "no" then you have no business placing the bet. If you do and lose don't blame the dealer.
Readers should understand that Seeking Alpha applies their own titles to my articles. I have no input on how they are titled.
That being said, there are now crystal clear examples of why some feel that investors in this sector are "unsophisticated".
1. The article (with regard to the debt issue) was virtually word for word from the SEC filing by Sirius XM. I made it a point to leave the language as close to the filing as possible so as to avoid confusion.
2. I went through the article and taking out Sirius XM's first person language such as "ours" and "us" and replaced those words with "theirs" and "Sirius XM". Being on vacation, and simply wanting to get the news up, I missed one or two instances of these types of words. My apologies. However, if any reader had taken the time to actually LOOK UP the SEC filing, they would have quickly concluded the intent.
3. Instead, we have several who jump to yet another conspiracy theory.
4. I had one email which quoted some of these responses here, and then wished that I "Die On Christmas".
5. For those that have not yet figured this out, I do not work for Seeking Alpha. Seeking Alpha pulls stories from my site, applies their own title, and republishes them. I do not control comments here, nor do I typically participate.
I find it interesting that people will jump to any conclusion without having taken the time to ask the source. Not a single person asked me to clarify the language. They simply jumped to an erroneous conclusion. It is little wonder why some challenge the "sophistication" of investors.
Happy Holiday's to everyone, including those that wish death upon me.
A sophisticated man just died today. Don't throw stones in a glass house. Every normal investor seems to be unsophisticated. We are in the dark. The banking elite tell us: Don't worry about the TARP, we have got it covered. Yeah right!!!
cos1000, did Mel do it on share holders backs, that maybe true. Who are the ones that are going to profit from it though (at least the faithfull one will)? Yes thats right the share holders. The one thing that would stop this would be a failed bankruptcy protection. Now that I feel is out of the realm of possibilities. So if I have to wait a little longer for SIRIXM to get to be the media giant that they will now be after the merger, so be it, I will wait. Once again the financing is the last hurdle to greatness for SIRIXM and if it takes alot of dilution (or even a RS), also so be it. I'll wait for three or four 2 for 1 splits and it going to 80 (that is possible if a RS happens).
No one forced you to invest. quit trying to make scapegoats out of people. Typical losers are those to look to other people when things don't go the way they like. Stop blaming people!!!
163888,
I am in total agreement with you. They need to get the debt taken care of and once they do (which they will), this will be a great stock because it already is a great company that just needs to get through this tough time!!
Sorry you're being vilified for doing your thing. Whomever is sending you death emails is a moron. To be honest, those emails should be going to Senator Dickbag Shelby lol! But that's another story. Tyler, you've done nothing wrong so I hope you'll keep reporting on the company. The hope is the company can get to certain resolutions sooner than later...so all the conjecture can cease--which is the worst part of this whole scene. It's the ongoing uncertainty that has everyone so frustrated.
I'm waiting and watching...which is all anyone can do. If it means anything to anyone, besides the TV ads now in decent rotation, I've finally just heard a SIRI radio ad yesterday on JackFM in my (major) market. HD radio ads have been in full effect for a few months and I was wondering if and when SIRI would do so. Those just started finally. My opinion there is they should have at least been doing periodic terrestrial radio ads all along since August to promote the buyout. The best way to kill any company is not advertising.
Happy holidays to all!
Well stated sir, and same to you and yours also...
No fear.
And of course that includes the dog! He deserves a nice fresh Tbone to knaw on for Christmas...
Moody's = a little late to the party (per usual)
Downgraded on Dec. 23...really?! Ya think? They've only owned the same debt now for 5 months. I suppose to be fair, they may have delayed this rating to give the company time to do something. And as everyone knows proactivity (nor openess) is not Mels strong suit--which only layers the frustration for many.
I made my statement about the $550M of New Debt taken on and the shares lent because I just want to make sure that it is clear that this is what put the SP where it is and it was Mel's decision to do it. There wasn't any prior notification or disclosure until the deal was done. I am not saying that I can't see several ways, provided that financing is still available, that the financing can be done with positive effects on the SP. I am just sick and tire of hearing how Mel didn't hurt the common shareholder and that we all knew about the debt. Yes we knew about most of the debt and the Chang of Control renegotiation for most of the other debt. Not the details of the interest rate resets, but that the debt was their. This debt was new and unknown, period. The framework of it was toxic to the common shareholder and now people are upset because this decision forced them into a situation that they could not plan for. That is my point. Its hard to trust management when your investment is at .12 / share because of a previously undisclosed debt decision that is the sole reason for the SP and hurts the company's ability to trade shares for debt. Today's announcement, 108M shares at to wipe out $15M in debt is a perfect example of what I am talking about. Oh well that's it I am done and I hope your right that the company will be a good investment in the future because it sucks right now.
First, I want to wish you and yours a happy holday...
Many of us have been through a lot with this company and I know you have been through more than I. And this will go down as a case history of one of the toughest nuts to crack in all of investing. The reason? The financial meltdown. There are no do-overs but I would have loved to see this same scenario played out say one year ago. Move all elements back just one year and see where we'd be. My suspicion is not at .12. There have been so many red-herrings on this it's not even funny. Including the delistng extension. That has hurt tremendously because, IMO, it fosters postponement of issues that otherwise might have been addressed much sooner given the real threat and deadline (for all companies even). But in this case, I think it's hurt plenty.
All in all, here we are and "here" is from where we go. I understand the frustration and have similar myself. I know we're togther in to see this through until its resolve--whatever that may be in the next few months. But eventualy we will get there.
Last few days have been interesting. As predicted by the charts, we've legged down yet again...this time so far approx .04 from the .15 high. Support maintained today on the Moody's news. A few times in the past we stopped @ .04 then upticked. Others, we've gone the full .07. I'm encouraged that we had no new Fund EOD redemptions last two days, as in Friday. Tomorrow is a half day. Maybe it is starting to run out of gas. Sooner or later, shorts have to lock in profits (if they want their money that is lol!). As far as the 260 lent shares, as you know I couldn't agree more. It's hard to say the exact status on them or where they are right at this moment. They were not recorded as outstanding, so that also leads me to believe they are not counted on the short interest. I could be wrong, but from my standpoint, they just don't exist in the real world, other than to those that have had them and have used them when needed. The question I have is if they were not recorded as outstanding, yet are sold short, are they just sold into the float or are they a special sale to those counterpartys who keep them until it's time to buy them back? An interesting thought...but my guess is the latter--esp because I feel like those are the shares that have been used to maintain price control lower and need to be accessed short (or long) as necessary (daily) to maintain percentage drops. To that end, I know (or feel like) there are still plenty of short shares in the offical record that are regular short--and therefore await SOP redemption.
But if nothing else, more proof of how difficlut this situation has been to manage and attempt to prognosticate. We've done our best and put up a good fight. Battles have been won and lost (mostly lost) but not for lack of trying on our part. Now we wait to see who wins the war...
Have a good one...
Your comments and outlook are appreciated...
Happy holidays...
A tough situation to be sure here but happy holidays to you also...
P.S. Remember I said back in Aug., that there was going to be about 5 or 6 months of tough times ahead before we get anywhere. Now while I did not think the PPS would get this low, I have no real explanation for, that is why I am still a big believer in the company. While the financing is going to be difficult I think it will get done, like it did about 4 years ago. You do remember what happen with the PPS after it got done dont you.
I want to return Best Wishes to You and Yours also.... Great time to appreciate all that we have......
As far as the lent shares go, they are calculated and completely transparent as part of the Shares Outstanding. They are not included in the GAAP reporting numbers only, because they were given / lent, not sold to the borrowers. They probably do make up a large part of the shares reported as Short positions. No way to know what percentage for sure but, with 263M in the last 2 week reporting and 259M lent, I would guess that there is a good percentage of these shares in that Short report. So my take from reading the prospectus is that they are transparent in every way except pertaining to GAAP #'s.
163888
I agree with you that the New Converts probably got to just under a buck. I think company silence, and more importantly the Proxy leading up to the annual meeting did the rest. No announcements of Real significance on debt refinancing didn't / isn't helping either. Now the Boards are filled with speculation on BK, with Evercore & JPM restructuring debt, which is also not helping. I do remember how bad the times were the last time they went through this but, still had not anticipated it being this bad this time around. Oh well, we will just have to wait and see, again.
Have a Merry Christmas All........
You're right about the lent shares as outstanding. I remembered reading these were not recorded:
>>Any shares that we loan to the share borrowers will be issued and outstanding for corporate law purposes <<
Here are a few other clauses that we should also remember:
>>The existence of the share lending agreements and the short sales of our common stock effected in connection with the sale of the Notes being privately offered concurrently herewith could cause the market price of our common stock to be lower over the term of the share lending agreements than it would have been had we not entered into those agreements. See “Risk factors — Risks relating to the offering — The effect of the issuance and sale of our shares of common stock pursuant to the share lending agreements, which issuance is being made to facilitate transactions by which investors in Notes may hedge their investments, may be to lower the market price of our common stock.” However, we have determined that the entry into each of the share lending agreements is in our best interests as a means to facilitate the offer and sale of the Notes pursuant to the related offering memorandum on terms more favorable to XM than could have otherwise obtained.<<
This is the clear statement that the bondholders wanted the SP lower. How low? Well, we'll never know how much for which they are responsible, but the clarity of concept (without any doubt whatsoever) is that they wanted the SP lower. Some people continue to challenge this or fail to report on it in the media (and the company itself declined to own up to it in the meeting, which I think is unfair to investors). It's one thing to enter into such agreements as they are stated in the small print of the B5 (that this financing was better than anything otherwise obtainable) and put that on shareholders without their consent, but then it's another not to publicly recognize this factor. This is why I refer have refered to it as the dirty little secret. All we read in the media is that "investors have priced in BK"...which in aggregate is true, but there is no mention of the (as the company itself states in the B5) "synthetic" component.
I'm trying to figure out how much of the current report short is "synthetic". Love to hear your opinion on my calc.
So, the initial lent shares deal was this:
>>Morgan Stanley & Co. Incorporated 188,399,978
UBS Securities LLC 74,000,005
Total 262,399,983 <<
The way I understand it...of those 188M, 183M were sold immediately @ the agreed upon $1.50 revalue price. As outlined in the B5:
>>The share borrowers are initially offering 183,679,988 borrowed shares for sale at a fixed price pursuant to this prospectus supplement and the accompanying prospectus. It is currently expected that the short position established by the share borrowers in making the initial offering of borrowed shares will be used to facilitate swap transactions with investors in the Notes, which will be used by these investors to establish their initial hedge position in respect of their Notes. <<
Then...the remainder of the 188M (4M) plus the 74M were then available for the hedge:
>> The share borrowers have advised us that they expect to offer up to approximately 78,719,995 of additional borrowed shares on a delayed basis (subject to market disruption and the unavailability of the accompanying prospectus). We refer to these shares as the supplemental borrowed shares in this prospectus supplement. Following the initial sale of borrowed shares pursuant to this offering, the share borrowers, or their affiliates, will sell, from time to time, (subject to market disruption and the unavailability of the accompanying prospectus), the supplemental borrowed shares in transactions, including block sales, on the Nasdaq Global Select Market, in the over-the-counter market, in negotiated transactions or otherwise. These supplemental borrowed shares will be sold at market prices prevailing at the time of sale or at negotiated prices. In connection with the sale of these supplemental borrowed shares, the share borrowers, or their affiliates, may effect such transaction by selling the shares to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from purchasers of shares for whom the dealers may act as agents or to whom they may sell as principals. Over the same period that the share borrowers, or their affiliates, sell these supplemental borrowed shares, the share borrowers or such affiliates may, in their discretion, purchase a number of our shares on the open market at least equal to the number of the supplemental hedge shares they are selling and/or enter into derivative transactions providing them with a synthetic long position with respect to an equal number of shares, in each case to facilitate hedging transactions by investors in the Notes. These purchases may have the effect of raising or maintaining the market price of our shares or preventing or retarding a decline in the market price of our shares. As a result, the price of our shares may be higher than the price that might otherwise exist in the open market.<<
AND...
>>The share borrowers may offer for sale pursuant to this prospectus supplement and the accompanying prospectus up to an additional 78,719,995 borrowed shares in the aggregate they are entitled to borrow under their respective share lending agreements. The share borrowers may sell the additional borrowed shares in various transactions at any time and from time to time after the fixed-price offering in amounts to be determined by the share borrowers. We refer to these shares as supplemental hedge shares. In connection with the sale of these supplemental hedge shares, the share borrowers, or their respective affiliates, may effect such transactions by selling the supplemental hedge shares to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from purchasers of shares for whom the dealers may act as agents or to whom they may sell as principals. Over the same period that the share borrowers, or their respective affiliates, sell these supplemental hedge shares, each share borrower may, in its discretion, purchase a number of our shares on the open market at least equal to the number of the supplemental hedge shares it is selling and/or enter into derivative transactions providing it with a synthetic long position with respect to an equal number of shares, in each case to facilitate hedging transactions by investors in the Notes. We have been informed by the underwriters that no borrowed shares will be sold by the share borrowers or the underwriters to Note investors. The share borrowers, or their affiliates, may from time to time purchase our shares in the open market and use such shares, including shares purchased contemporaneously with the sale of supplemental hedge shares, to facilitate privately negotiated derivative transactions by investors in the Notes.<<
So that's approximately 78M total for hedging on this deal. Am I leaving anything out? Do I remember correctly that the other part of the equation are the lent shares on the 2.5% Feb '09 Notes?
This is just another blurb on the "synthetic" nature of the deal for those reading who don't know this stuff......
>> Because the share borrowers, which are affiliates of the underwriters, are receiving all of the proceeds of this offering, this offering is being conducted in accordance with NASD Rule 2710(h) of the Financial Industry Regulatory Authority, or FINRA. Because a bona fide independent market exists for our common stock, FINRA does not require that we use a qualified independent underwriter for this offering.
The underwriters may engage in over-allotment, stabilizing transactions, covering transactions and passive market making in accordance with Regulation M under the Exchange Act.
• Over-allotment transactions involve sales in excess of the offering size, which creates a syndicate short position.
• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
• Covering transactions involve purchases of shares in the open market after the distribution has been completed in order to cover syndicate short positions.
In passive market making, market makers in the shares who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchase shares until the time, if any, at which a stabilization bid is made.<<
So what all this means is, it's so hard to know where all downside pressure in aggregate has come from, but as in the last clause above (and in others above), the maniplation of controling the SP is clearly written and spelled out. Not that we didn't know this from about mid-Sept on, but just reitering.
Your thoughts cos1000?
Or are all 262,399,983 shares lent considered as part of the hedge?
Your thoughts?
I agree. That's why I began to think with JPM in the mix, and that they got 25B in TARP money (to help distressed companies due to the credit freeze), that they give SIRI .5B or .75B @ 6% (5% plus Libor)...maybe due in Dec of 2010 as they currently have no debt due in 2010 at all. That would give some time (like GM is getting from assistance) for SIRI to figure out the debt scenario....and things like selling some of their spectrum to gov or other for cash that they could then use to pay down that debt.
This would give the SP some time to recover now.
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too:
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or being hated don't give way to hating,
And yet don't look too good, nor talk too wise;
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim,
If you can meet with Triumph and Disaster
And treat those two impostors just the same:.
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build'em up with worn-out tools;
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings,
And never breathe a word about your loss:
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"
If you can talk with crowds and keep your virtue,
Or walk with Kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much:
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!
MERRY CHRISTMAS everyone. The adventure will continue on friday see you all then.
Thank You for summing it up nicely..... I am heading out to enjoy the Christmas Eve with family and friends and will be back to comment after the Holiday.......... until then enjoy.
Again thanks for spelling it all out as has been available initially around Aug 8, 2008, and finally around Oct 27, 2008, in the Lent Shares Prospectus filed with the SEC. The details of the deal really do spell out the situation as we are now experiencing regarding the company's SP.
I do interpret all of the shares to be used for the purpose of Hedging. The initial 183M were lent by the Company for the purpose of qualified entities to borrow these shares for Legal Shorting transactions, assisting the sale of the 7% Bonds, totaling 555M. We have to remember that these Convertible Bonds were going to be sold through August, 08 until early September, 08, and that this was XM Bond debt, for which there would be NO XMSR stock available once the merger was transacted. That is why the shares Had to be lent for the Bond Deal to be accepted by the Underwriters in the 11th Hour. Hence, the reason for claiming that Mel had no choice if the merger was to be consummated.
The share price was set at 1.50, which I interpret as the Borrowed Sale price initiating the short transaction, completing the convertible arbitrage. These shares will need to be purchased to close the short position at some point (as you have previously suggested)..
The additional shares, 79M, are referred to as both, additional, and supplemental, hedge shares. This batch of SIRI shares were not lent at a predetermined price, and were only to be released when the initial shares associated with the XM's Convertible Bond offering was completed, and the $1.50, 183M shares were issued. The price or actual value of these shares would be determined between the Parties at the time of their release, and were variable and dependent, on their use to support the transaction event, which would be other than the original XM Convertible Bond issue. I do interpret that these shares are the only shares that are part of the............ < may take and actual or virtual Long position for each share shorted> agreement.
Because of my interpretation, and I could be wrong, I believe these shares are all being used for the Hedge, and account for almost all of the reported Shorted Shares currently outstanding. IMHO.
I do not believe any of the shares that would have been used for the Convertible Arbitrage transaction on the Feb 09 debt due, initiated in Feb 05, are in the Float as Shorted Shares at this time. I believe those shares were covered a long time ago.
It is way to conspicuous that the Short Shares Outstanding being reported are relatively equal to the amount of Lent shares during the Merger. It is my opinion that these active short positions are why the stock is so Handily Manipulated on a daily basis. Retail investors have been locked out of shorting this stock and with all of the Scrutiny on IB's from the SEC during this financial crisis I do not believe that their is a lot of Naked Shorting taking place at this time. JMHO
I think I would collect what I had by end of next week.
I do not expect anything to happen to SP before Dec 31st.
When are "short" positions required to be covered? (How long can you short a stock?)
Hope you had a good holiday...and that's my favorite poem. Although my current governor has recently tainted it some.
Re read your last post. 5M is 5M and if you were in that position, why would you leave 5M on the table (using 5M as an arbitrary figure of course). But the point is, we don't know when they will have had enough. As I have said in the past "a time and place of their choosing." We've blasted through a few potential places but yet still have not hit .10 (which could be a magic number in terms of auto program). It could also have been moved lower since we've been stagnated here for a while. It could be .08 or .07. So, as of now we are on a (SIRI spot just hitting CNBC airwaves as I'm typing lol) 60 day time window--within which we will have practically every answer we have sought now for the past 120 days. Obviously there are a few key catalysts of news that can help resolve this situation. And the first is up in the next few days in terms of possible YE profit-taking for that accounting. After that, in January, there is this week Fri/Monday for New Year profit taking for that accounting. After that, now looks like possible good news out of this GMAC new bankholdng status due to be approved today. If that happens, it is supposed to provide an instant jumpstart to consumer auto lending at least...which will directly of course benefit SIRI. After that, it is the resolve of Feb 15 21/2 Notes and after that is the "by March 1" resolve of other '09 debt. So that's pretty much the lineup. What I find encouraging is that the meeting was 12/18, close to the EOQ. If the company reaffirmed guidance (and upped it some even), one has to believe the Q is essentially made...and that report right now is scheduled for 2/23. I believe it's things like that that are continuing to keep the stock steady and not below .10. So short-term, I see many potential positives to create a final or at least significant captiulation on the short side. We just don't know what it will be...
Lastly, if as some believe, there is a short-term Jan. rally, and some of these things for the company coincide, it could make things that much more interesting.
Dec A short info just came out today (to us peons that is)...no surprise here...actually a slight increase:
Short Interest (Shares Short) 263,767,800
Days To Cover (Short Interest Ratio) 5.2
Short Percent of Float 7.62 %
Short Interest - Prior 263,151,700
Short % Increase / Decrease 0.23 %
Short Squeeze Ranking™ -38
The answer to your last question is no time limit, just as in a long, you can hold a short position as long as you think prudent...
(what if Sirius bought up the float before shorts covered?) (or someone else bought all free shares)
Thanks for your detailed outline and input...The more I thought about it, I agree with you that all 262,399,983 shares are for hedging...as the Notes themselves carry an interest rate and their own maturity date (2014). It's a little confusing because one could think the initial 183M sold at the revalue of 1.50 were actually part of the remuneration of the loan in principal (upfront). The actual short representation is a little baffling to me at this point and here's why:
Before the July "deal", the SI was 159M (July A). The July B was reported as 310M which we have to believe includes a portion of the 183...but the July A does not. The following are the subsequent reports from there (A/B):
July 159.96 M/310.67 M
Aug 209.12 M/231.92 M
Sept 236.17 M/199.00 M
Oct 232.01 M/285.21 M
Nov 270.26 M/263.15 M
Dec 263.77M/
So from the July A, the SI never dropped below 199M. So one has to wonder what has become of the "pre deal" 159M (and how much may be left). The difference between the highest report 310 (July) and lowest report of the period 199 (Sept), is 111M. So if that was all "non-deal" covering (which much of it could have been in the mid-Sept pop back to a buck from .68 since many, like us, thought that was as low is this is going for sure), that would still leave 48M (ahhh, but we or they never expected Lehman!!). And now that SI is 263M, what is the config? Hard to say exactly but I agree with you that a decent percent of the current 263M is from the hedge. Although, it does stand to reason that even appox. 50M of this can still be non-hedge (or max everything over at least 183M, the original known offering @ $1.50). My take is somewhere in there, maybe 50-60M. If I'm right, these are the folks who would be the kindling and force some of the hedge to buckle given the right conditions or news. IMHO...
And so we watch...
I just can't imagine that scenario so I can't really answer you question...
As to your LVWR, most likely they are on Pinks (and not BB), which restricts brokers on many such stocks to be able to remain long-term marginable (regarding MMs). This stringency became tighter about 2003 for many brokers. I remember getting the notice about it then...
that is a very coincidental (or not) number of shares short...... My other thought on the short covering is that all the back and forth in these penny increments, is the shorts buying and selling these borrowed shares to lock in 95% of their short position. With these shares their is nothing stopping them from buying small lots to cover large gains and then shorting the same shares again. Is there?
Also mogami_99
The initial short Hedge position was for 183M shares, set at $1.50 and tied to the XM Convertible Bond offering of $550M. The value set of the remaining $79M as outlined by s162, were lent / sold or whatever they decided to do to accommodate Hedge short positions, is really unknown to us as retail investors. All of these shares, although registered and issued outstanding, appear only to be accounted for by the gross numbers reported in the Dec A short share report above. When the Bond Holders cover these positions and stay long, the SP will move quickly and without notice. They are really playing a waiting game and what is happening behind the scenes is geared for the institutional investor and Bond Holders who are also holding shares, bought cheap, to make a lot of money. All a retail investor can do is wait around with them until they make their move. IMHO
On Dec 26 02:36 PM sl62 wrote:
> mogami_99...
>
> I just can't imagine that scenario so I can't really answer you question...
>
>
> As to your LVWR, most likely they are on Pinks (and not BB), which
> restricts brokers on many such stocks to be able to remain long-term
> marginable (regarding MMs). This stringency became tighter about
> 2003 for many brokers. I remember getting the notice about it then...
Pre Merger their was a Merger Arbitrage play that had buyers going long on XMSR and short on SIRI for the spread on share price of the two stocks vs share conversion 4.6 for 1, at the time of the merger. I don't know how many of these shares were outstanding but, they had to cover automatically at the time of the merger. Tyler did an outline of the process with the end result being Free Shares of Siri when all Long XM and short Siri positions were closed. This could account for the difference in Siri Short Share reporting. I do remember the number being fairly substantial.
Fool In His Money
You said it better and I agree that they are not waiting around to take it all at once. This Very Tight to Flat range indicates to me that they are staying short but not to lock in profits but to filter through all of the short shares outstanding. The cover purchase will just be an expense against all the gains that were made on the way down.
That was why I asked how long shorts could stay short. So if SP went to 10.00 it would not matter since they could just stay short forver. They could never collect but they would never have to cover either.
The borrowed shares technically do not have to cover, but as the SP goes higher the Short position becomes a LOSS liability on the books of the investor. The risk to shorting has an unlimited loss potential as the SP goes higher, and a finite gain when the SP goes to zero. Retail investors short equities using margin accounts with very specific limitations. To much of a loss in a short position and the margin call will clear you out. There isn't any benefit in not covering a short position as an Investment Bank (IB) either. That's why there is such a clamor to short cover on company good news, performance, or acquisition rumors. Puts (options), on the other hand can simply be allowed to expire out of the money and your loss is limited to your purchase price of the Put option contract. These SIRI shares that are short will have to be covered if and when the SP recovers.
Your scenario of $10 and still being short from these prices are not realistic or practical. They would represent a huge liability that would have to be paid. Investors who short stock are much more savvy than that. Why not simply purchase stock to cover as the stock goes up and hold your long position? This way you can cover costs associated with loss in the short position while reaping the gains from an equity whose company's reality has changed.
Of the 4 bil or so shares total how many are actually "for sale" right now?
I bet 100mil or so invested now would really put the shorts in trouble.
100 mil today would buy 750,000,000 shares. Do you think there are that many out there? How would the shorts cover?
eventually the shorts will cover and then these shares will have to be returned to Sirius correct? So if Sirius holds these shares while SP recovers at some point they stand to make cash from selling them back into general float.
If there are 250 mil such shares and Sirius holds them to .50 they can make 125 mil from sale.
I like the fact that SI increased over the past reporting period (albeit ever slightly). Given the last leg down, the picture seems to remain in tact as some of us here believe it to be (and as deduced by us "We the Peons" who get limited tools and information with which to make accurate decisions on our investments). I'm encouraged going into the new year.
I think Sirius is secure. They are not going BK. They got the means at meeting to solve all the problems. I objected because these means were the "easy" way out.
Managment transfered the debt onto the exiting share holders.
existing share holders are stuck. They have no choice but to "stay the course"
fruture investors who wait for debt and reduction of float are going to get a secure investment. It will not be as "exciting" as it is now. And anyone who gets in now stands to do quite well. (they can only lose .12 per share)
Sad indeed..... but headed in the right direction anyway.
All I can say about the hypothetical of buying 750M shares is that it would raise ownership issues. If the company wanted they could have the Board immediately flood the market with additional common shares given their new authorization of 8B shares, rendering your Hostile ownership and stock price manipulation valueless.
I agree... Bring on the next chapter to this saga that has become Sirius. I am also pleased with the SP sitting where it is given all the voting authorizations given on the 18th. All in all it held up pretty well. I will look to next week to see if their is an opportunity to get a little more in for what will be an inevitable move up at some time. Thanks and enjoy.....
The lent shares on the XM bonds will only be returned when the Bonds have been fully funded in 2014 or earlier, but all bonds must be funded before the shares are returned to the company.
I feel SP strasining to rise. only more shares being shorted can hold it back.
We always have to consider fact that majority of stock is held by private investors. (unlike most comapnies)
The stock holders at Sirius are mostly "longs" (whether they wanted to be or not)
I won't be apologizing to Harltieb any time soon. What the company did was perfectly legal. It doesn't mean I like it, but it's legal dude and unless you are going to sue the company for a case of sour grapes, there is little, if anything to be done in a courtroom. Again, none of us caught in this situation like it or think losing multi-thousands a fun thing to do...but most of us realize we got caught with our d%ck in a slicer and are not making a federal case out of it. I have nothing against you but I disagree with what you and Hartlieb are pursuing. Wall Street is not for the faint of heart and heavy losses are de riguer. Just ask the guy who just killed himself over the Maddoff scandal (or don't since he's got nothing more to say). Many more people lose money (and other things) on the Street than make it. And many more people wind up in the exact situations that we are in than don't. I have empathy for anyone, and all, who got caught in the SIRI swirl. However, that doesn't make it illegal. Companies have been employing the exact same strategies as this for decades. Nothing new. The idea for investors and traders alike, is to try to avoid these snares.
The deal is:
>>You show us Mel planned to crash the stock! You congratulate each other for fine sumaries all saying what I have said for 6 months. <<
Some of us learned the ramifications of the hedge the hard way in the last 4 months. Judging by your statement, I have to wonder... if you knew about this 6 months ago (pre merger) and understood it, why didn't you sell then and get out when the stock hit $2.75 in late July? (or in April when they hit $3.90)? Making such moves would have shown that you were on top of protecting your investment. Many here wished they would have done exactly that but by your statement, you actually could have. If you look at a YTD chart, it is clear the SP was drifting lower each month of this year. That's my point to you. Each investor is beholden to keep an eye on their money (which includes you, Hartlieb, and all of us...no exceptions)-- and it's no secret, stocks do not come with guarantees. What most of us are doing from this experience is learning from it to become better investors and next time keep a sharper eye on our risk management (to prevent from happenng ever again one day owning a $3.00 stock and the next having it worth .13).
So, by your own admission of knowledge of what the company was up to, who's really to blame here? You keep saying Mel. Sorry but I don't think so. IMVHO.
I have felt like a real dope in the past recommending this stock as a buy, but rather than buy into all the shenanigans and drama going on in the short, I see this company being very profitable in the future. I will continue to buy so as to dilute my investment as well and for my more pessimistic friends I will continue to recommend that they hold on to what they have.
See you all at the top...if you can wait that long...