Sirius XM radio have one foot in the grave UPDATE #4 Sirius XM Radio Inc., the satellite broadcaster, will receive $530 million in loans from John Malone’s Liberty Media Corp. in exchange for board seats and an equity stake, avoiding a bankruptcy filing.
Sirius XM will first get $280 million and use part of the financing to repay convertible bonds due today, the companies said in a statement. Liberty also agreed to offer to purchase as much as $100 million in outstanding loans and to lend New York- based Sirius XM an additional $150 million. Sirius XM doubled to 21 cents at 9:35 a.m. in Nasdaq Stock Market trading.
The company, run by Mel Karmazin, said Feb. 13 it might have to file for bankruptcy as soon as today if it couldn’t reach an agreement to restructure its debt. The bonds due today are held by Charles Ergen’s EchoStar Corp., which had been buying Sirius XM debt after the broadcaster rejected its unsolicited bid, according to a person familiar with the plan.
“Sirius has bought itself some time to work its way through the downturn, but they’re far from out of the woods,” Fred Moran, an analyst at Stanford Group, said in an interview today. Moran, who is based in Boca Raton, Florida, recommends investors hold the shares and doesn’t own any.
Sirius XM has about $3.25 billion in total debt. U.S. auto sales have slumped in the past months, cutting demand for radios pre-installed in cars. Bloomberg02/14/09 Financially strapped Sirius XM Radio Inc. said Friday that it could file for bankruptcy as early as Tuesday if it cannot successfully negotiate with the holders of its debt.
While the satellite radio company said it has exchanged $172.5 million of debt maturing in December for new debt due in 2011, it still has about $175 million coming due this Sunday.
Sirius is fighting against attempts for control by Charlie Ergen, the chief executive of Dish Network Corp. (DISH) and sister company EchoStar Corp. (SATS) Ergen bought much of a $300 million batch of discounted Sirius bonds that come due next week. Sirius had rejected a previous offer by Ergen for control of the company.
A bankruptcy filing for Sirius would give it the right to terminate contracts with on-air talent, such as Martha Stewart and Howard Stern, who has a five-year, $500 million deal. A Chapter 11 filing also could crimp Sirius' growth because subscribers might shy away from a company in bankruptcy. Sirius has nearly 20 million listeners and provides a wide range of music, sports and talk radio.
Liberty Media Corp. is in talks with Sirius about possibly investing in the company, a move that could fend off Ergen. AP Article02/11/09 This rumor is upgraded to 'strong' today. Sirius XM Radio Inc has been working with its advisers to prepare for a possible bankruptcy filing, the New York Times reported on its website on Tuesday, citing people close to the company. The move could put pressure on satellite television company EchoStar Corp, which reportedly holds a substantial amount of Sirius XM debt. The Wall Street Journal reported Monday that EchoStar chief Charles Ergen made an offer to take control of the satellite radio company late last year, but he was rebuffed.
Sirius officials did not respond to several telephone and email messages, and EchoStar declined comment.
Sirius has been working with restructuring expert Joseph A. Bondi of Alvarez & Marsal and bankruptcy lawyer Mark Thompson of Simpson, Thacher & Bartlett to help prepare a Chapter 11 filing, the New York Times reported, adding that a filing could come within days.
A Simpson, Thacher spokeswoman declined comment, and Bondi was not immediately available for comment.
Sirius has also been working with investment bank Evercore Partners, the newspaper said. Evercore could to be reached immediately. Reuters 02/10/09 Sirius Satellite radio has to raise $175 million by February 17th or risk filing bankruptcy.
According to a report in the Wall Street Journal, Sirius CEO Mel Karmazin is rushing to raise $175 million not only to keep from bankruptcy but to fight a take over attempt from EchoStar Corporation the parent company of Dish Network.
The company recently reported that they suffered two quarters of net subscriber losses. Sirius also has several programs dedicated to NASCAR.
Sirius has nearly $175 million in debt that comes due next week, and according to the report it owes a total of $3.25 billion. The talks have been going for from several weeks and EchoStar has been acquiring Sirius’ debt as they seek to take over the company.
In addition to the debt, Sirius has a number of major rights payments due shortly for programming for itself and XM Satellite Radio, which it obtained last year. Among the payments it owes $43 million to the National Football League, which is due next week, and $60 million to Major League Baseball that’s due next month.
If Sirius cannot raise more financial backing, EchoStar could compete the takeover and force it into bankruptcy, which could allow Sirius to get out of some of the contracts that had been negotiated while there was still competition for programming. Examiner.com 01/06/09 Sirius and XM started individually with a lot of promise and exclusive sports programming, including NASCAR. Sirius XM currently has the satellite radio contract to carry the Sprint Cup, Nationwide and Camping World Truck Series races live as well as the IndyCar Series races live.
Unfortunately, the recently merged company also has about one billion dollars of debt and Sirius XM stock has plummeted to less than fifteen cents a share.
Recently, the New York Times painted a less than optimistic picture of the struggles of the Sirius XM corporation. Here is an excerpt:
Its balance sheet is larded with nearly $1 billion of debt that matures in 2009 and must be refinanced, but try finding a sympathetic banker in our current hard-luck environment.
Sirius XM has nearly 20 million paying customers, many of them evangelists for the service, but what does that matter if you can’t pay your debts? The company has never turned a profit and cannot predict when it ever will.
These are not good words for NASCAR fans who are used to enjoying the Sirius 24-hour line-up of NASCAR content that includes both original shows and live races.
It was 2005 when NASCAR announced that it was switching satellite radio partners from XM to Sirius beginning with the 2007 season. The price tag for the entire deal was $107.5 million.
As fans know, the newly merged Sirius XM NASCAR group is still sorting things out. Gone are shows from several drivers and in limbo are pros like Claire B. Lang and other content formerly carried by XM. January should truly be a month of transition for the Sirius team.
The word bankruptcy is being tossed around should Sirius XM be unable to refinance the billion dollar debt. Financial experts have lots of opinions, but one big problem is the lack of new car sales. Sirius was originally an automotive-based service and still relies on that slice of the pie as the foundation of the business. Excerpts from Daly Planet