Kamagong

Analysts Find It Hard to Be Bullish on Sirius XM

Tyler,

I made a few postings suggesting to allow stockholders and subscribers to lend money to the company. As small investors we do not have ulterior motives but to protect our investments in SiriusXM. I hope you have direct contact with management to recommend our views. Thanks

Will Murdoch Make a Move on Sirius?

I like your idea of having the subs/stkhldrs participate in the financing. With the current credit situation, SiriusXM may not get the financing they need. What then? We're screwed. Especially if the subs think that SiriusXM may not be around much longer. We'll have cancellations galore.

Allowing the subs to lend funds to the company, with the same options as the existing Sub-lenders may not be such a hard-sell.

Is a Reverse Split in the Cards for Sirius?

If the SiriusXM's plan to increase the authorized number of shares in order to sell additional shares to pay off the notes is a bad idea. The additional stock sales will simply drop the price of the PPS and the sales proceeds will probably be insufficient to redeem all the notes payable.

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.