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jswede
156 Comments
Sirius XM 2009 Debt Is a Non Issue for Investors
Author writes: "...refinancing those notes should not be a problem."
should not be a problem, huh?.... let's see, SiriXM just went to market and borrowed ~$700mil to be paid back in 2013... and what did that cost them? 16%... per year. You call that "no problem"?
(that is, they borrowed ~$700mil for 5yrs, but they are paying 13% of $778.5mil per year in interest and $778.5mil back at maturity -- they borrowed $778.5mil at $.90 on the dollar. That's a 16% yield to maturity. They back-loaded it -- that's what strapped companies do.)
and the convertibles? they should be pretty easy to reissue if needed, right? After all, "credit markets exist for a reason", right? They just issued $550mil in converts under the XM name.... they probably paid around the same 1.75%cpn on those as their outstanding notes, right? Not quite -- they are paying 7.00% per year on those.
No problem... just refinance... credit markets exist for a reason... wow...
Sirius XM Radio Analyst Roundup
www.orbitcast.com/arch...
...seems to me that XM would not want their prospective (and exisiting) subscriber base to know about the much cheaper alternative that is going to eat them alive... (along with XM's debt, that is)...
The Ford Debt Disaster Continues
ummm... "if they sold this debt off"....? their debt is not an asset last I checked... explain to me how they'd "sell this off"?
The Ford Debt Disaster Continues
ummm... "if they sold this debt off"....? their debt is not an asset last I checked... explain to me how they'd "sell this off"?
Wake Up America, You’re Sinking
Will Muni Bond Market Embrace Connie Lee?
yes they will. and will remember to not do business with them and the others.... going fwd, muni insurance will be left to the 5-10% of the muni market that actually needs it. they are all about done.
Sirius Stock Up as CEO Buys Two Million Shares
Sirius XM's Long Road
right - no interest rate at 16%, it was at 13%. I get 16% b/c they issued ~$800mil in par value, that they are paying 13% on. But they sold that debt at $.8993 cents on the dollar, and have to pay back the full dollar in 2013. So, real figures: $778mil par amt x .8993 price = $700mil raised. Their interest cost is 13%/yr on the $778mil par amount, plus the $78mil difference in the amount raised and the amount to be paid back in 2013. In all, a 16% cost per year on the $700mil borrowed.
Some of you make good points. I was a "merger bull" and a Sirius bull going back several years. So some of your arguments are very familiar to me. Then over the winter I changed my mind.
I don't think that XM will be obsolete in a few years - I do think that they won't be the only game around in a few years. and that may be enough.
In sum, the major difference is that I believe time is not on XM's side. I believe they will see pricing pressure from competition before they dig themselves out, and it will all spiral from there... Others seem to think the pricing pressure/comp is way down the line, and by that time they'll be a "cash cow" with a solid balance sheet.
Good talk fellas (and ladies).
Sirius XM's Long Road
Sirius XM's Long Road
I have unlimited data with AT&T. so nothing more than my - whatever it is - $60-80/mo for full phone service and all.
More to the point - look ahead a short time in th future - the [unit of data]/[unit of cost] ratio is moving in one direction. and at an exponential rate. Take yourself back just 2 years and look at it vs now... another example is that the internet over 2G is faster than it was over dsl 5 years ago...
XM is not taking part in data's rapid price decline / capacity rise because they paid a fixed rate for it way back when they built their satellite networks -- they are paying today, and will so in the future, until they die, what it cost to build and send satellite signals over half a decade ago. (nearly 10 years ago?)
If for some reason the cost of IR is at all prohibitive, or even a factor at all, at a moment in time, you can bet your house it won't be at all a short time later...
Without $3.5 bil in debt (plus another $500mil in loans) they may have time to turn it around before internet radio gains traction... but that's not the case. In addition to the 16% int rate on the $880mil just issued, they're even paying 7% on the $550mil convertibles!! Unheard of. If those ever convert you'll have more dilution, btw... enjoy that.
Sirius XM's Long Road
I can already get internet radio on my iPhone anywhere I go. Chrysler will have internet in their cars next year ( www.bit-tech.net/news/... ), others will follow by 2010.
It's not much of a leap from there.... perhaps it is for you.
If "next year" is a stretch, the major point is that internet radio will certainly be up and running well before the latest $800mil bonds (which they are paying 16% interest on) are even close to maturity....
may I add that those internet radio competitors will have tiny barriers to entry, and approx zero debt - at least compared to XM's $3.5 bil.... XM will tread water for a few years, then die by margin compression and debt..
Sirius XM's Long Road
Sirius XM's Long Road
Significant Value in Combined Siri/XM from Merger Synergies - Citi
"I dont see why XM-SIRI would lose the game here.. " >>> for starters, because they have $1bil, soon to be $1.5bil, in debt and are still hemmoraging cash... and their internet competitors, who will slash XM's revenues/margins razor thin, will start out with pretty much a clean balance sheet and relatively non-existant barriers to entry.
Significant Value in Combined Siri/XM from Merger Synergies - Citi
Music? last.fm and pandora have you covered. Anything you want.
"exclusive" sports packages? I was listening to the local broadcast of a baseball game from across the country last night on internet radio thru my iPhone... just to see if I could.