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  • Bond Holders Playing Hardball With Sirius XM? [View article]
    "As I read the filing, it seemed that Sirius offered exactly what was required, unless you are referring to some of the info in the original Q&A section."

    That's what I see too... it was 533.3333, which was increased to 543.1372 shares, after the dividend (per the 10-K). I then did a straight line estimate of date and stock price (January 17 and $3.15); which came to an estimated 38.3 shares... taking the offer that needed to be extended at 581.437. I believe the offer extended was 581.311... mine was a tad high, but close enough. The offer is exactly what was supposed to be made if a change of control.

    Given the date and this info from last week, I'm surprised no one took the offer. The premium is going to disappear on these bonds steadily over the next 18 months. Based on the info Sirius provided, the bonds last traded at $1,841.23 on January 31. The stock price was $3.14 that day and the conversion was 543.1372 shares -- implying a value of $1,705.45. That's a 7.96% premium.

    Hmmm... on second thought, one could just continue to hold the bonds and collect the interest that is accrued and yet to be paid through expiry -- and collect more than the remaining premium. Then take the shares and sell them (or cover short positions).

    That said, I am now thinking the offer was just made because they had to do it. Though, I wouldn't be surprised to see Sirius make private $$ deals to beging taking these out later this year; or buy them themsleves on the market.


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    Feb 27 07:10 AM | Likes Like |Link to Comment
  • Sirius XM Issues Notice On 7% Debt [View article]
    "The Notes were probably out of the diluted count at the end of Q2 because the closing price of the shares was below the $1.875 conversion price on June 29th "


    You are correct, I just confirmed it in the 10-Q. The Notes were included in the diluted sharecount in Q3, but excluded in Q2... dummy me, I should have known better to look there first. I was pointing this out in previous years, as others missed it. So yes, the increase in diluted sharecount from Q2 to Q3 is the 293 million shares from the 7% Notes. This is shown in the Q3 10Q.


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    Feb 5 08:44 PM | Likes Like |Link to Comment
  • Sirius XM Issues Notice On 7% Debt [View article]
    "That's 168 million shares light and we know there are there are additional options and warrants that could/should also be in the diluted count which would make the difference that I calculated greater than my 168 million. Am I missing something?"

    You averaged the Q2 ending and the Q3 ending and came to an average of 6.741 billion, yet the Income Statement shows 6.579 billion... this is your concern? Did you factor it as a daily average? It's not a straight line average... it is a daily average. While the 10-Q doesn't state it, the weighted average shares is a daily average, not a monthly or quarterly figure. With this in mind, Liberty converted their shares in September, the last month of the quarter... thus the daily average is going to average it lower.

    Try to stay away from focusing on the daily weighted average shares and just use the amounts shown issued on the balance sheet. At the end of Q2 it was 3,824,178,762 shares + 293 million + 2.586 billion = 6.7 billion; At the end of Q3 it was 5,192,364,730 shares + 293 million + 1.293 billion = 6.779 billion. If you try and average the numbers together and make them match up to the weighted daily average, you're going to frustrate yourself - unless you understand exactly when the conversions took place, for doing the math.

    As for the increase of 70 million shares from Q2 to Q3... we know for a fact that Karmazin was 45 million of those shares in Q3... the other 25 million were likely other employees. The conversion of options for Karmazin also messed with the daily weighted average.

    Some other things to keep in mind...


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    Feb 4 10:13 PM | Likes Like |Link to Comment
  • Sirius XM Issues Notice On 7% Debt [View article]
    CN Said, "First, if all the Notes are redeemed, the interest from December 1, 2012 will be forfeited. I was ignoring the prior year adjustment to interest that would have been booked, and I would assume that it would flow through the current year anyway."

    You are correct, I did miss the forfieture of the accrued interest -- so the amount that would be "forfeited" is from Dec 1, 2012 going forward. Looking at the numbers, from 12/1/2012 through 11/30/2014, the amount of interest would be $77 million, using my method; or calculated to $78 million using your method... a wash. So this would be the "savings amount", not the previous $67.5 million I stated - due to the forfieture accrued interest, as you noted.

    That being said... I didn't assume or factor any impact of the exchange rate change into my numbers. I just used a straight line. The forfeiture does impact things somewhat.


    CN Said, "Are you certain of the accounting treatment? Even if I accept that the 26.3 million shares will result in a charge (apparently based on the price on a specific change or exchange date), why wouldn't a portion of that charge hit Q4 when the exchange ratio was permanently adjusted because of the dividend?"

    Absolutely 100% positive. Any time you pay more for the extinguisment of debt, the extra amount paid is considered a premium and charged as a loss. While the dividend increased the exchange from 533.33 to 543.13 at the end of Q4, the shares were not delivered/exchanged yet -- this may (or may not) impact Q4. I don't believe it does until the shares are actually delivered... Regardless, even if it did impact Q4, the increase to 543.13 is only equivolent to $17.1 million (at $3.17/share). The increase to 581.31 is an additional $66.5 million. Combined it is an additional $83.6 million (I had it at $85 million as there are other expenses also included in the early retirement... the figure could actually be over $90 million at the end of the day).


    CNSaid, "And why wouldn't you consider the retroactive savings on accrued but forfeited interest from 2012 as an offset to that charge? "

    Don't confuse the balance sheet with the income statement... while they interconnect, they are not the same. Debt that pays interest is constantly "charged" to shareholders, regardless of when it is paid out. This is shown as "Interest Expense"... and is the amount of interest paid for that time period. Obviously, bonds don't pay every month... thus they "accrue" until the pay date, which is June 1 and Dec 1 each year. If the accrual date goes to Dec 1, 2012, as you say... then all interest for 2012 has been paid up to that date already. The $3.2 million "accrued" for the month of December, has not been paid... nor has the amount accrued for January.

    Retroactive? Keep in mind that you're only talking about $3.2 million. This amount will be included in Interest Expense, as well as carried in Accrued Interest on the balance sheet. Assuming all Notes convert and the interest is "forfeited"... this will then be shown at the end of Q1 as a deduction from Accrued Interest of whatever the amount is... likely the $3.2 million for December. You won't actually see this broken down, but it will be in there. Plus you'll also see a reversal of the $3.2 million previously charged in Q4 - as a benefit in Q1.

    Now with that in mind, you're talking about removing $3.2 million from $85-90 million in Loss on extinguishment of Debt... keep in mind that this line item is a NET figure... NET of reversals and other items.

    So yes, I stand by my charge of nearly $90 million in Q1 as a Loss on extinguishment of debt.


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    Feb 4 09:33 PM | Likes Like |Link to Comment
  • Sirius XM Issues Notice On 7% Debt [View article]
    CN Said, "You are correct about the way the convertible debt SHOULD be treated. However, if you look at the 10Q, you will see numbers that don't make sense. We know from the recently filed Liberty Form 4 that they owned 3,298,774,821 common shares representing 50.25% of the common stock."

    Let me clear some confusion... you need to keep in mind that the when calculated EPS (basic and diluted) they use AVERAGE shares for the quarter. This mucks everything up. My numbers all check out. There were 5,207,146,165 shares at end of Q2; Liberty had 1.293 billion in preferred and there were 293 million reserved for the 7% Notes... that comes to 6.79 billion (roughly) for diluted count. They show 6.57 billion for the quarter and 6.84 billion for YTD... keep in mind these are AVERAGES they are using. Thus the difference. But for me, they add pretty much are close enough to adding up.


    CN Said >>>If enough of the Note holders convert and put Liberty back below 50%, it is my opinion and expectation that Liberty can, and will, sit on the sidelines as Sirius begins the buyback until Liberty ownership goes back over the 50% level.<<<

    My estimates show that Liberty will fall to 48.37%... while Liberty may sit by and do nothing, as you suggest... shareholders could file a lawsuit/challenge to their ownership. I don't really sit that likely, although I am expecting some sorta lawsuit over the ownership change... they ALWAYS happen. I'm sure there are lawyers prepping the shareholder suit as we speak.

    That said, I'm showing Liberty needing approximately 117.8 million shares to maintain 50.1%, s/p conversion of the 7% Notes with premium. Or the elimination of 235 million shares via Sirius buyback.

    I would not be surprised to Sirius do negotiated buybacks of blocks of shares, perhaps directly with the 7% Note holders - in order to stabilize the pps. Or in the very least, be somewhat aggressive in buybacks after the 319 million shares are delivered, in order to support the stock price. Liberty may even participate some too, in order to maintain the ownership - but that is lesser likely, IMHO.

    Just some thoughts...


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    Feb 4 04:12 PM | Likes Like |Link to Comment
  • Sirius XM Issues Notice On 7% Debt [View article]
    CN Said, >>>To a lesser extent, there will be a minimal impact on earnings per share [EPS]. Not only will there be more common shares outstanding, but the diluted EPS will also decline<<<


    Keep in mind that the issuance of an additional 26.3 million shares will be seen as a premium/penalty and written off under "Loss on extinguishment of debt", within the "Other income (expense)" line item. At current prices, this is an additional $85 million (non-cash) which will NOT effect Sirius' Adj EBITDA estimate, however it WILL effect the Sirius EPS... both diluted and non-diluted. This $85 million will hit in Q1 as well as the full year figures. Last year Sirius had a good amount of this too, however it was masked by the $3 billion Tax Benefit that Sirius took this year. Without a significant benefit this year, investors need to keep in mind that expenses will be increased by $85 million - assuming 100% tender their Notes.


    CN Said, >>>if some or all of the $550 million of 7% debt is eliminated, the company will save up to $38.5 million in interest expense in 2013 and $35.3 million in 2014<<<

    I have $35.23 million potential interest for 2014 (rounding difference obviously). But I have $54.63 million potential interest for 2012-2013... for a total of $89.5 million.

    Keep in mind that the accrual anniversary date is Aug 1 each year - with half paid on June 1 and the other half on December 1. With this in mind, Sirius SHOULD pay accrued interest on June 1, dating back to Aug 1, 2012. Obviously the tender offer changes things... Sirius will be paying accrued interest from Aug 1, 2012 through Feb 28, 2013 - which comes to $22.36 million. The savings will be from Mar 1, 2013 through Nov 30, 2014 - which comes to $67.5 million saved. But this assumes a 100% take up rate.

    While the savings is nice, it should be kept in mind that this $67.5 million savings is over a 22 month period. The $85 million charge (above) will be immediate and all in Q1. Net-Net, the long term difference to shareholders will be an increase of $17.5 million... but I'd take that to get these Notes off the books.


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    Feb 4 03:26 PM | Likes Like |Link to Comment
  • How Many Sirius XM Shares Will Liberty Media Sell? [View article]
    CN... too many assumptions for me. For example, you're assuming that if Liberty stops participating, then Sirius discontinues the buyback -- I disagree with that opinion.

    Would you as a Board member tell a group that owns nearly 50% of your company "no" and try and screw them over? Not going to happen. Once Liberty gets the FCC approval, all bets are off. They will close the deal almost immediately by buying whatever they need to reach 50.1% - and will replace the board members that are not on board with them.

    And I definately see the the buyback continuing at that point... with or without Liberty participating. It really wouldn't matter since they'd be controlling everything.

    Liberty will get their investment back -- via the eventual RMT.


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    Dec 11 06:31 PM | Likes Like |Link to Comment
  • Sirius XM: Has UBS Begun Filling Another Forward Contract Today? [View article]
    This is a link to a Yahoo discussion of exactly this scenario you mentioned, which I started in mid November. It is the more likely scenario that I believe will play out, as I stated. My discussion above is just raw numbers of what they need to do what... I believe a buyback is the more likely scenario: http://tiny.cc/yt7qow


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    Dec 3 01:50 PM | Likes Like |Link to Comment
  • Sirius XM: Has UBS Begun Filling Another Forward Contract Today? [View article]
    It's going to take more than that... at least 200 million more shares, if you assume a 7% conversion.

    Right now, with all of Liberty's adding and converts, they sit at 3,248,666,979 shares. If you assume that the 7% holders take early conversion then it introduces an additional 27.7 million shares into the float. Since Liberty would get some extra shares too, they're holdings would go up to 3,249,220,794 shares. However, as you noted the overall fully diluted number would also increase to about 6.821 billion shares.

    What is also left out is Karmazin has an additional 30 million options that will be sold over the next several months (the final batch vests at the end of this month). There is also at least another 10 million in stock options from employees that will likely be sold over this period too. Thus, this increases the fully diluted to at least 6.86 billion shares. In order for Liberty to maintain 50.1% ownership - you're looking at at least 188 million shares... but likely more.

    If the 7% holders take the extra shares, then Liberty is likely to need at least 200 million shares, if not more to be "safely" in control. But this early conversion is a big assumption... these bonds are already trading at approximately 165 or so; when you include the extra shares for early conversion, the value from today's current stock price is around 66%... so they're trading fully valued. Does the holder take the extra shares - a $1.713/share value - which is a 66% premium to the current pps? Or does the holder try and sell the bonds on the market to caption the 65% premium in trading value? I guess, that is the question. As long as their is a market for these bonds, then there is no reason to convert.

    In hindsight? The extra premium built into the trading price of the bonds could dry up pretty quickly (down to 52% or so); however early conversion is a guarantee of 66% (currently). But keep in mind, if/when this happens - you're looking at 300 million shares hitting the market as the holders are likely dump to them... unless they hedged them previously, of course. Then the MM's will be dumping them.

    Just some thoughts.


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    Dec 3 01:14 PM | 1 Like Like |Link to Comment
  • Sirius XM: EBITDA Or EBIT Duh [View article]
    You know, the more I think about your last post, the more I have trouble with it. (You may not realize it, but you made yourself come off as an elitist that is being "attacked" by me... which couldn't be further from the truth. Your lengthy explanation about yourself comes across as trying to make yourself sound superior to me and anyone else here... but as I stated before, to each his own.)

    The fact is, you came to this thread and tried to present the opinion that XM brought twice the debt into the merger, with much higher coupons, under worse call terms, was a much larger company being taken over by a smaller Sirius; and that it should have been left to bankruptcy. Of all the above statements made by you in this thread, only one remains viable... which I never even disputed in the first place. You've even admitted to such.

    Look at some of your statements:

    ~~~~~~~~~~

    "If Mel had know what was coming, he could have let XM die and gotten its assets pretty cheap."

    "Most of the deals Sirius negotiated had coupons 9% or less (mostly less) and terms to call early were a flat 103% to 106%. The XM debt was mainly in the 9% to 13% notes with much more expense than a flat 3% to 6% to call so it was 2x the debt on worse coupon and call terms."

    "ANY time a smaller company successfully takes over a larger company, that means the larger company was in more problems."

    ~~~~~~~~~~

    FACT: At the time of merger closing, Sirius had $1.279 billion in debt that had an average coupon 5.863%;
    FACT: At the time of merger closing, XM had $1.842 billion in debt that had an average coupon 6.640%

    Yes, I do not dispute that some of the XM debt was originally discounted and had strict call provisions. However, it is not "twice the debt" and it was not in the "9% to 13%" range as you stated. The higher coupon rates came AFTER the closure of the merger and in order to CLOSE the merger because of the change of control provisions. Those higher coupons were BECAUSE of the merger.

    You can claim I took you out of context all you want -- but if I were you, I'd go back and re-read your statements and see how they were coming off to the average reader. You made the assertion several times in your postings, suggesting twice the debt at much higher rates... which is simply not true.
    Further, I don't care what legal speak you want to bring up for excluding current maturities... debt is debt. It's still impacting the balance sheet regardless of when it's due. In fact, you suggested excluding the current maturities saying, "If the company wants to refinance that or pay it off, the covenants and such are not material to the merger." You also said, “Debt that expires this year before a merger is still debt, but its covenants and such are not a separate item to be considered in the merger.” This seems to be the crux of your reasoning for excluding the current maturities. Okay, that's your opinion... but what if the company has NO WAY to refinance it or pay it off? Do you still exclude these amounts in the merger discussion? What about the fact that the maturities were not current at the time of the merger first announcement in 2007, but WERE LT? Or the fact that the maturity was not going to occur until after the merger closes? Think you should still discount it?

    Thus is my point to note the FULL amount that Sirius had in debt... their current maturities was $302.5 million at the time of the merger closing. Did you know that Sirius only had $220 million cash on hand at the time of merger closing and was still bleeding money through negative FCF... ($217 million) worth in the first half of 2008? The company did not start having FCF until AFTER the merger. Do you really want to discount that $302 million from their debt just because it was "current" - for legal reasons - while ignoring the fact that they did not have the cash or cashflow to pay for these notes at maturity? And ignore the fact that these notes would have to be (and were) refinanced by the company -- thereby making them LT again? Do you really think that this $302 million was not a discussion in the merger, knowing full well that the Notes would have to be refinanced in a difficult marketplace at the time? Did you know that these were the same Notes that Ergen was buying and was going to use to force Sirius into bankruptcy in Feb 2009? That these were part of the maturities that Liberty had to save Sirius XM over? Again, thus is my point… these current maturities were very much a factor in the merger… thus should be included in any calculation of Sirius debt.

    It's a bit myopic to discount Sirius' balance sheet... because when you step back and look at the whole picture, they were in the same boat as XM at the time... it had similar amounts of debt; it was nearly the same size (assets wise) as XM; and it had similar coupons. All of which goes counter to what you were trying to suggest above.

    I'm sorry you took my challenge of your statements as an attack - there was none intended. Don't take my liberal use of the word "insane" as an attack... it's just a word in a lengthy conversation. My point is, there's just too many out there that do not step back and look at the bigger picture. Too many that were not there at the time all this went down. Too many that did not do the work to understand the balance sheets... because when you do, you then really understand what was going on.

    Yes, the merger created a whole new set of issues for the company as a whole (as you noted), by creating higher coupon debt due to the XM debt refinancing of their "put" debt; it also delayed refinancing of other maturities (for both companies) which put them in the situation with Liberty. But had the merger not gone down, neither of them would have survived, IMHO.


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    Sep 30 01:25 PM | Likes Like |Link to Comment
  • Sirius XM: EBITDA Or EBIT Duh [View article]
    >>>You have used my quoted phrase out of context and harped on it. Shame on you. And yes it DOES matter. Debt I owe will not stop the merger. The conditions on the LT Debt could. One is a civil suit that might get resolved 5 years later, the other is an immediate injunction. You seem to take everything as of equal importance at all times.


    Nice spin.


    >>>So insane I might be and any other personal attack qualifiers you might choose to use, but forget about coming across as an expert in all things, especially opinion about things happening behind closed doors.

    For someone who doesn't care what others think of them on a board like this, you sure spent a lot of time trying to sell yourself on this board as an expert who knows more than me... to each his own.

    And I still disagree with you. Debt is debt. You can give everyone all the legal talk you want about "conditions"... but at the end of the day, debt still impacts the balance sheet the same whether LT or ST. Nothing was taken out of context... your comment VERY clearly came across as you suggesting that XM having twice the debt as Sirius... but that is CLEARLY not the case.

    Good luck to you.


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    Sep 30 09:24 AM | Likes Like |Link to Comment
  • Sirius XM: EBITDA Or EBIT Duh [View article]
    >>>I did find the one I had read that specifically converted terms of debt to like 10% so that the change of control clause would not be invoked. I will dig it out and post it again. All that being said.


    Sandman, you really need to dig deep to understand the financing and what went down… I study it up and down for years and was witness to it when it all went down.

    First, those were not 10% Notes originally. They were 1.75% Convertible Notes… Sirius XM changed the terms of them to 10% to avoid the change of control provision. Those notes were then repurchased over the course of the following year via later debt placements made by Sirius XM. Here…. XM had the following debt outstanding at the time of the merger:
    1) 1.75% Convertible Senior Notes due 2009 –
    These Notes were changed to 10% to avoid the change of control provision. QUOTE: “In July 2008, we amended the terms of its $400,000 aggregate principal amount of 1.75% Convertible Senior Notes due 2009 to increase the interest rate from 1.75% to 10% per annum effective July 2, 2008 as part of an agreement whereby holders of the notes waived any right to seek a change of control put in connection with the Merger.”

    2) 10% Senior Secured Discount Convertible Notes due 2009 –
    These only had $33 million of the original placement outstanding and so there was no change of control provision remaining since most were already repaid; these were paid in cash when they matured in 2009

    3) Senior Secured Revolving Credit Facility Due 2009
    4) Senior Secured Term Loan
    These 2 debt issues were originally through GM. They were purchased by JPMorgan and UBS (the same two who pushed the underwrote and supported the merger. These obviously waived the change of control provision. These two notes were later combined into one and purchased by Liberty in that refinancing. Sirius XM them paid them in full a few months after that.

    5) 9.75% Senior Notes due 2014
    6) Floating Rate Notes due 2013
    7) Debt of Satellite (702-4) LLT-10% SSN
    These 3 debt issues were “put” on Sirius XM at the time of change of control; 2 of them were paid in full, the other Sirius XM made a tender offer for.


    >>> I am still not convinced of the role Mel played in the negotiations vs the signing, ie or if it was litterally an over the barrel situation. The structure is very similar to other XM debt which makes me think it was negotiated by who ever in XM did the previous ones.

    You’re insane if you don’t think the CEO was involved… especially all along; Karmazin even admitted to such. The deal was what was available at the time, under those circumstances.


    >>> XM also had some very large increases on the expense side for general and administrative expense amoung others. It looked like they spent $130M more to earn $100M in revenue or something like that. Not a good deal.

    That was the impact of the original GM deal, which everyone knew was a horribly expensive deal for XM. GM cranked production up at that time, severely increasing XM expenses. I give Karmazin credit for redoing that deal after the merger. XM at the time in 1999, had very little room to negotiate an OEM partner, since Sirius already had Ford. XM had to get GM or it was done. It cost them.


    >>> Debt that expires this year before a merger is still debt, but its covenants and such are not a separate item to be considered in the merger.

    Here is what you claimed, your exact words: “Before the merger, on June 30, 2008 Siri had 977,369,000 in LT Debt while SiriusXM after accounting for XM had 2,800,107,000. XM brought 1,822,739,000 practically 2x the debt.”

    You cannot make this claim. Sirius brought $1.28 billion in debt into the merger, LT or short term – it doesn’t matter what it is, Sirius had this amount outstanding. XM had $1.8 billion at the time of the merger. Your statement that XM brought “2x the debt” is factually incorrect. It was actually 40% more. I’m sorry, 40% more is a way different picture than 200% more.


    >>> Maybe a merger weary Mel signed something because it promised and end to the drama and things on the debt front were looking to get worse instead of better

    This is not new news… it was commonly known that there were groups ready to challenge the FCC’s ruling and block the merger. So Karmazin took the best offer he could get right away in order to close the merger. This was widely publicized at the time.


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    Sep 29 01:12 PM | Likes Like |Link to Comment
  • Memo To John Malone: You Cannot Save Sirius XM Radio [View article]
    Was this article published in 2002 or 2012? Holy flashback... I haven't read a "no-one will pay for radio" article in years!

    Thanks for this... glad to see there are myopic people like you still out there!


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    Sep 27 12:25 AM | 1 Like Like |Link to Comment
  • Sirius XM: EBITDA Or EBIT Duh [View article]
    >>>I was careful to add LT or long term when I stated my numbers simply because they have bearing on a merger.<<<

    Debt is debt, whether you put an "LT" in front of it or not. I'm sorry, you will not convince me or most readers here otherwise. Just because debt goes from 366 days to maturity to 365 days to maturity doesn't mean that it doesn't effect the balance sheet anymore. Sirius had $1.28 billion in TOTAL debt instruments. Period... XM had $1.84 billion.


    >>>I did not see much debt that was paid off. Even the 8K you linked does not talk about cash payments, only debt replaced with shares or rights for shares.<<<

    A little more digging and you would have found it. The XM side of Sirius XM issued $1.3 billion of new debt after the merger (July 31, 2008) and immediately paid $1.1 billion of it on debt issues (that were put on XM from change of control provisions), plus interest, premium and penalties...

    ~~~~~~~~~~~~~~~~

    Refinancing transactions

    In connection with the Merger, we refinanced a substantial portion of our existing indebtedness:
    • On July 31, 2008, we issued $778,500 aggregate principal amount, net of original issue discount of $78,395, of the 13% Notes; and
    • On August 1, 2008, we issued $550,000 aggregate principal amount of the Exchangeable Notes.

    We used the proceeds from the transactions described above to:
    • repurchase 99% of its 9.75% Senior Notes due 2014 at 101%, plus $18,685 in accrued interest. The tender offer for the 9.75% Senior Notes due 2014 included a consent solicitation to amend the indenture governing the 9.75% Senior Notes due 2014; (HOMER NOTE: $600 Million)
    • repurchase 100% of its Senior Floating Rate Notes due 2013 at par, plus $1,501 in accrued interest; (HOMER NOTE $200 Million) and
    • satisfy its $309,373 transponder repurchase obligation, for both debt and equity holders of a previously consolidated variable interest entity. Our debt repurchase obligation included a 1% of principal prepayment penalty and $6,668 in accrued interest.

    http://1.usa.gov/RSuVN8


    >>>Mel might have sat in on the negotiations, I need to see more documentation that says he did or somewhat controlled the negotiations, which were done well before the merger. In which case he knew they were toxic going into the situation and agreed to them.

    Of course he knew about them... as the CEO of the company you think he wouldn't? The fact is this... in connection to the merger and change of control, XM got put $1.1 billion in debt -- which was refinanced with the 7% and 13% Notes, for which Karmazin was a part of.

    Keep in mind, I don't blame him, XM or XM's people -- it was at the time of a debt meltdown in the country and the company got raked over the coals. Plain and simple. They had no choice but to take whatever deal they could get - in order to close the merger ASAP.


    >>>XM had done a number of deals up to that point with the same kind of, though not as extreme, covenants and discounts. Siri had not.<<<

    Again, because Sirius had less debt because they wiped out (for all intents and purposes) their shareholders from 2002... something that XM did not do in 2002.


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    Sep 24 10:00 PM | Likes Like |Link to Comment
  • Sirius XM: EBITDA Or EBIT Duh [View article]
    >>>Long term debt is minus current liabilities because they are paid off shortly after the filings.<<<

    I'm sorry, but I choked a little on this one. To discount current liabilities from the debt count because "it's paid off" shortly thereafter is just an absurd statement. Regardless of when the debt is to be paid, it is still being paid with cash on hand or by refinancing. Thus it impacts the balance sheet. Sorry, I will never agree with you by discounting it from the total. Sirius had $1.28 billion debt at the time of the merger, period. Regardless of when it matured.


    >>>The following 8K is for XM announcing the 13% notes. The terms are covered in other documentation but they are XM, not SiriusXM at the time. As part of the merger, these were partially renegotiated so that the things like change of control were not invoked.<<<

    The point you missed -- Karmazin was a part of the negotiations for these notes. They were placed to finance the refinance of the XM debt that was put to XM at the time of the merger - due to change of control. This was very well known at the time. Both the 13% Notes and the 7% Notes were placed to finance the closing of the merger... period.


    >>>It does not matter if there was a "non-public" letter or not. The balance sheets in the 10Q are accurate and Sirius debt as of the merger was 977K Long Term.<<<

    This is incorrect. Sirius debt was $1.28 billion. You can claim some maturities were current all you want... they still required refinancing and/or cash. Again, you suggesting the smaller amount is absurd.

    Case in point... let's say a company has $5.1 billion worth of debt, however $5 billion of it was maturing in 11 months. Their balance sheet would show LT Debt of just $100 million, because $5 billion was subtracted, as it was current... would you really suggest to investors that that company "only had $100 million in debt"? And completely ignore the $5 billion that was due? Please tell me you're not that naive to think that...


    >>>You might have nostalgia for XM and feel that Mel/Siri some how screwed the better company, but XM was near bankrupt and debt was spiraling. <<<

    Huh? Nostalgia? Not at all. I was a shareholder in both companies before and during the merger process... I just did my homework. Those thinking that XM was near bankruptcy and Sirius was not -- are only fooling themselves and did very poor due diligence.


    >>> I would like to find out what the rating n the notes were. I bet it was close to Junk status by then.<<<

    The Sirius and XM debt was ranked the same... all of it junk. Dating all the way back to 2002. Were you investors in these companies dating that far back? I was. Did quite well in both of them. Did my research too.


    >>>the fact that had Mel been inituitive enough to guess the credit crunch was coming, he still would not have redone the 13% because of the astronomical costs of calling the debt.<<<


    Considering Mel was a part of that discussion at the time, kinda makes your statement moot.


    >>>ANY time a smaller company successfully takes over a larger company, that means the larger company was in more problems.<<<

    Smaller company? Really? The companies had nearly identical assets; nearly identical debt; nearly identical stockholder equity (deficits); nearly identical amounts of paid in capital; and finally nearly identical market caps... and you're going to hang your hat on one being "larger" than the other? Really? You people really need to do better due diligence.


    >>>As previously announced, on July 31, 2008, XM Escrow LLC (“Escrow LLC”), a Delaware limited liability company and wholly-owned subsidiary of XM Satellite Radio Holdings Inc. (“Holdings”), issued $778.5 million aggregate principal amount of 13% Senior Notes due 2014<<<

    Great.. you quoted this from the 13% Note indenture. These Notes were placed on July 31, 2008. I trust you realize that the merger CLOSED on July 28, 2008... 3 days prior. You want to explain to everyone how XM placed these Notes without the CEO of the new company (Sirius XM) being involved in their placement? Oops. Didn't think to check your dates, did you?

    Item 2.01 Completion of Acquisition or Disposition of Assets
    Pursuant to the Merger Agreement, on July 28, 2008, Merger Co. merged with and into XM, with XM as the surviving corporation in the Merger and continuing as our direct wholly owned subsidiary. Pursuant to the Merger Agreement, each outstanding share of the common stock of XM was converted in the Merger into the right to receive 4.6 fully paid and nonassessable shares of our common stock, and each outstanding share of the series A convertible preferred stock of XM was converted in the merger into the right to receive 4.6 fully paid and nonassessable shares of a newly-designated series of our preferred stock, described below in Item 5.03
    http://1.usa.gov/NLPato


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    Sep 24 02:16 AM | Likes Like |Link to Comment
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