Clarifying Sirius Ambiguities over Liberty Shares 76 comments
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With recent happenings in Sirius XM Radio (SIRI), it is no surprise that there still exists some confusion about the Liberty (LCAPA) deal, what the preferred shares mean, when Liberty may elect to convert those shares, and how the Liberty preferred shares impact the outstanding shares of the company.
As is often the case, people tend to try to look far deeper into situations than is actually required. In simple terms, the Liberty preferred shares are out there, and out there to stay. There is no method by which these shares would ever be returned to Sirius XM Radio unless Liberty decides to work on some sort of new deal with the company. Under the current contract, those 12.5 million shares are Liberty’s to keep. Reading the SEC filing carefully is worthwhile, as readers will be able to clearly see the separation between the 12.5 million preferred shares and the loan deal.
The Liberty deal had two specific phases that dealt with two very specific issues. The preferred shares were part of phase 2, and are not reversible. The loan terms are reversible, but the shares would not be a part of any such reversal. Again, the 12.5 million shares are in the control of Liberty, and will be until such time that Liberty decides to convert and sell them.
All of that being said, the likelihood of any loan reversal in the current economic environment is very slim. Another suitor would need to arise that carried an offer superior to the current deal. Over the past several months, the only other suitor was Ergen, and his deal would call for a virtual take-over of the company. The Ergen deal was rebuffed once, and will likely be rebuffed again if Ergen decides that he still has an interest. Now that Liberty is in the mix, Ergen, in my opinion, is out of it. The only way for Ergen’s plans to get a second life would be if Liberty walked away. Further, Liberty has already agreed to never obtain more than a 49.9% stake in the company, thus, Liberty would not be able to wrestle control away.
Simply stated, it is once again my opinion that Liberty will not convert their shares any time soon, and that Sirius XM will not find a sweeter deal on the table. Hopefully this gives investors some clarity on the status of Liberty’s 12.5 million preferred shares.
Position - Long Sirius XM
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There is only one possible situation where the 12.5 million preferred shares could come back to sirius XM radio at this point, and that situatiuon is out of Sirius XM's control.
IF (and this is a HUGE IF) Liberty were to not come through on the $150 million in cash/credit in December of this year, Sirius XM would have a possible claim to gain back the preferred shares because Liberty will have defaulted on a part of the deal.
The reason this is such a huge longshot is because the 12.5 million preferred shares are worth well above the $150 million Liberty would need to come up with. For Liberty to default simply makes no business sense whatsoever.
The foolishness of this debate is in the fact that checking out the documents, and some simple phone calls (Liberty Investor Relations as well as Sirius) will provide any investor the answers they are seeking.
There is no going back to get the 12.5 million preferred shares for Sirius XM radio. Anything to do with those shares is out of the control of Sirius XM. Plain and simple
As far as I can tell Brandons right, and everyone should start apologizing.
On Apr 22 04:59 PM 163888 wrote:
> First of all some people are getting confused with outstanding shares
> and issued shares. At present because the other shares are not issued
> Liberty will get 40% of the total amount issued up to that time.
> For instance if SIRIXM where to issue another billion shares before
> Liberty converts then Libertys stake would then go from 2.6 to 3
> billion if they convert just after. So lets say the vote to approve
> the extra billion shares gos through then the most SIRIXM can issue
> is 5.4 billion, leaving 3.6 billion in reserve waiting for liberty
> to convert.
OMG, I feel so retarded. I just reread both these articles again slowly, and the posts again. Tyler and Brandon arent even fighting over the same points. Brandon never said it would LITERALLY remove the ownership, but hes stating the 1 billion in dilution if sold at current market value, would "in effect" change the Liberty deal, by being now able to pay off 500 million in loans at current market value. It makes the Malone loan, a gift instead for 40%, just a larget diluted share of 40%. He now owns 40% of simply a few more shares. Im assuming the only reason were trading at .44 cents right now is because Malone allowed them to escape BK, and were not not trading at BK levels. So in a way, he allowed Sirius's equity to become sellable again. Issue more shares, sell them when the sp is at .80 cents for .60 cents, and you got 600 million dollars. Take that money, and you immediately pay Malone back. Since this dilution of 1 billion shares ended up repaying a loan purchased in Feb. for 3 billion shares, you win. Basically by giving away 3 billion shares you allowed yourself to be able to sell 1 billion shares for the same amount the loan was for, then you made out. So now they are slightly more diluted, but instead of oweing 500 million dollars at 15% now they owe zero dollars at zero percent. They in essance sold 40% of the company at the time(in Feb.) for 4 billion shares, not 3 billion shares. And converted it from a loan, to a gift. You do the math.
As far as I can tell Brandons right, and everyone should start apologizing.
Relmor: kudos to you. You were more right than me again. I thought I could get in at .30 and you said no. Waited the week that I wanted to and got back in at .35. Wish I had gotten back out at .60 though. Damn that was a bad morning to go to the dentist! LOL
No worries. Your not the only one. In fact too many buys were sitting were you were, so they couldnt let them fill, knowing it was going up again. Look for similar patterns here seen last time. Play the ranges. You can still do well.
Im Not Jim Cramer, thank you.
You have affirmed my suspicion that 163888 is Jim Cramer. (100,000 thousand people gasp at the same time.)
163888, 1302 comments, damn, relax. If you’re not Jim Cramer, you are going to have an aneurism. Even Tim AND Brandon don't have that many. Try some meditation or backing away from the ticker. If not, you are going to start twitching soon. I don't even have to chime in because you thought of everything I ever thought of thinking.
I owned shares at around $4.00 leading up to when merger talks started. My own due diligence had me back out and I am thankful that I did. I got back on this year at an average of 0.23. I have seen nothing but good from this company looking at my gains/losses and the future looks promising. The only thing we can do is speculate until the markets digest the next move.
One could only speculate that things are going well under the hood at siri if they plan to launch another satellite in the coming weeks. Plus the release of the I-phone application which could (COULD) keep some subscriptions because of the added value. Not to say that one would play the I-phone all day and kill the battery. At the barber shops while waiting my turn. At the grocery store waiting to check out. I am only speculating.
Everyone, Liberty has those shares unless... (Insert speculation)
Take a deep breath and moving on in life.
Instead of bickering on blogs about who's an idiot for their interpretations, I was driving in my 2009 Jeep built in my home town listening to free Sirius for one year. A light bulb went off and I wrote to Sirius asking them to advertise to the second and third generation vehicle owners on their re-discovered youtube page. There is a market for people not affected by the economy and buying used cars for reasons to speculate. They have a radio with the Sirius logo but don't have an account.
My plan was modest but I speculate that it would have an enormous impact on their bottom line. Just for the sake of moving on, this is the response I received on my idea;
Dear Richard,
Thanks for your feedback regarding your great idea for SIRIUS. We are
here to help!
Richard, we continually rely on customer ideas like yours and research
To enhance your entertainment experience, we thank you for bringing your
great idea to out attention. As we strive to create the most diverse
listening experience available, we find that the feedback we receive is
crucial to our success. Please know that you have a voice at SIRIUS
and your comments will not go unnoticed. We have forwarded your email
to the appropriate programming department for further review. We look
forward to you listening to our fantastic music programming.
We are committed to providing you with the best in customer care. If
you have any more questions; please feel free to contact SIRIUS Customer
Care. For your convenience, we are available 7 days a week at:
SIRIUS Customer Care: 1-888-539-7474
As well as by email at:
sirius.com/customercare
And you can always manage your account 24/7 by visiting our website at:
sirius.com
Great idea, Richard!
Sincerely,
Michelle C
SIRIUS Customer Care
Did you know that SIRIUS has great money-saving billing options? You
can get 1-14 months free depending on the option you choose. Call us at
888-539-SIRIUS (7474) and we’ll help you choose the plan that’s right
for you!
SIRIUS Satellite Radio, the Best Radio on Radio
I speculate that it was at least forwarded to marketing judging from the response of Michelle C. I also speculate that I could be having a Forgetting Sarah Marshall moment because Michelle is in customer service. I am tempted to send an idea about launching satellites at night because it hurts dolphins in Ecuador. Just to gauge the response. Long story short, do what you want, don't call people idiots especially if they are on the payroll and you are in the crowd. Again, copy and paste your post to whatever program you use if you so choose to call someone an idiot or retarded. Better yet, take it for what it is worth. Let’s make some money!
El Guapo jefe, I had better get a wall of text hit point combo. Right on time on both posts, you almost had me at tears.
Here is one for thought, if the longs continued to add to their positions, eventually; wouldn’t the shorts run out of real estate? Thus creating a Zeno’s Paradox of sorts. Probably couldn’t happen because people are flighty even on fake news.
You are pretty good at putting words into other peoples mouths though, any way you can get the word out that Obama really opposed schip legislation? Oh, and don't run with scissors.
On Apr 23 11:28 AM 163888 wrote:
> tabularasa, Yea you are now going to try and say you were joking
> about what you wrote about. Yea right, you just dont want people
> to think you are a moron for thinking what you were thinking. It
> was a a joke yea right, like that will fly. I suggest people read
> all his comments to confirm he is an idiot.
>
> As to me needing the short bus. I think that bus is for you. I was
> not the one who could not get the simplest statement. Unlike you
> I can put 2 and 2 together. Finally I dont have tyo kill people like
> you, people like you will end up killing themselves because they
> never see whats coming so they never step out of the way. I just
> hope you dim wits dont take a innocent person with you.
>
> "Wow 163888, you are a moron. I suppose your the guy that doesn't
> get jokes right? Needs clarification? Back of the classroom? Short
> bus? Focus Factor? You had ADD right? ADHD? Go take your meds, try
> not to kill anyone."
On another note, I'd love to know when this iphone app will be released.
On Apr 23 02:32 PM 163888 wrote:
> Yea well if I am a child you should not even be born yet. This child
> called it exactly correct and you got it wrong. So what does that
> say about your intelligence level. Simple logic says you are a retard
> with less intelligence then a child.