No Sirius for Charlie

Purp1eOne

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Jun 15, 2006
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Sirius XM Gets $530 Million Investment From Liberty (Update1)
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By Cécile Daurat and James Callan

Feb. 17 (Bloomberg) -- 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 get $280 million in the first stage of the financing and use some of the proceeds 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 will give New York-based Sirius XM an additional loan of $150 million. The stock doubled to 21 cents in early 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.

Karmazin, 65, pitted Malone and Ergen against each other to save the company he formed seven months earlier. Malone and Ergen, both based in Englewood, Colorado, control the largest and second-largest satellite-TV broadcasters respectively and could use Sirius XM’s capacity to integrate radio and TV services, according to Fred Moran, an analyst at Stanford Group.

Over the decades, the two men have competed for customers and over acquisitions. In 2003, Ergen, 55, abandoned a bid for DirecTV Group Inc.’s then-parent company, Hughes Electronics Corp. DirecTV is now controlled by Malone, through Liberty Media.

Pay Radio

Karmazin completed the merger of Sirius and XM, the only two U.S. pay-radio providers, in July, after the credit-market crisis took hold. Sirius XM has about $3.25 billion in total debt. The stock has traded for less than $1 a share since September as investors became concerned that Karmazin wouldn’t be able to manage the debt or meet growth projections.

Malone gained control of DirecTV last year after buying out News Corp.’s stake. Rupert Murdoch’s News Corp. had bought the stake in 2003, after Ergen dropped his bid on DirecTV’s parent company because he couldn’t get regulatory approval.

Sirius XM, which lured customers with programs including talk-show host Howard Stern and the National Football League, has more than 18.9 million subscribers.

Ergen’s Dish Network Corp., separated from EchoStar last year, had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.
 
IMHO, Charlie is the bigger winner here. He'll make a few million just by paper shuffling. Malone however, will be cash strapping Liberty for a least two years. That may very will put another crimp in D*s technical R&D.
 
IMHO, Charlie is the bigger winner here. He'll make a few million just by paper shuffling. Malone however, will be cash strapping Liberty for a least two years. That may very will put another crimp in D*s technical R&D.

Yeh I think they just said on CNBC that Sirius has a billion in debt outstanding. That's all on Malone's hands now (and the other shareholders of course). Sirius was only a deal for echostar at a certain price. Otherwise, it's an overpriced albatross. I think it'll still go under eventually because it isn't managed very well which is a root problem.
 
Yeh I think they just said on CNBC that Sirius has a billion in debt outstanding. That's all on Malone's hands now (and the other shareholders of course). Sirius was only a deal for echostar at a certain price. Otherwise, it's an overpriced albatross. I think it'll still go under eventually because it isn't managed very well which is a root problem.


The article states 3.2 billion in debt. Add the .5 billion loan from Liberty and that's a lot of debt. Charlie probably is better off just getting his money and running. He made out pretty good in the deal from what most are saying.
 
Either Charlie pulled off another one by sticking liberty media with Sirius, or he lost out on this one!

I'm sure he would have preferred to grab Sirius at a severe discount, but poor, poor Charlie will have to console himself with the couple of hundred million he nets by getting full value for something he paid 10 or 20 cents on the dollar for....

(tiny violin plays)

It's OK Charlie, let it out, I know how much it hurts to "lose".... (pats him on back)

Right. The man just made more than I'll make in a lifetime in a week on his "loss".

And if he weakens DirecTV's main backer in the process? So much the better...
 
I'm sure he would have preferred to grab Sirius at a severe discount, but poor, poor Charlie will have to console himself with the couple of hundred million he nets by getting full value for something he paid 10 or 20 cents on the dollar for....

(tiny violin plays)

It's OK Charlie, let it out, I know how much it hurts to "lose".... (pats him on back)

Right. The man just made more than I'll make in a lifetime in a week on his "loss".

And if he weakens DirecTV's main backer in the process? So much the better...

Are you implying he made around $300M profit?
 
No, but it was definitely in the more than $100 Million range..... If he owned most of the $250+ Million in debt, which he paid $25-50 million for, then yes he made around $200 Million...
 
You have to remember Chrlie took a gamble on the SiriusXm debt purchase.

IF SiriusXm would have filed for bankruptcy Charlie would have lost his arse in the deal.

Score one for Charlie the gambler.

He would have been one of the creditors waiting in line and would have obtained Sirius's comm assets (which is what he wanted) sans any attached debt by either taking them in lieu of payment, agreeing with the other creditors to make cash payments to them for their share of the assets, or buying the assets outright during the bankruptcy proceding (paying less than the bid amount for his debt's share of the proceeds. His gamble was either ending up with Sirius's comm assets for a very discounted amount or a cash payment in full for discounted debt. He would make out either way. There were only two men for whom this "gamble" had a potential payoff, Ergen and Malone. Malone, to keep Ergen at bay, had to expend an enormous amount of cash for an interest in a failing company for which he likely doesn't have a controlling interest. Had Ergen not been in the picture, Malone could have picked up the remains after bankruptcy much cheaper. Ergen forced the issue, sticking it to Malone while pocketing a big chunk of change. CNBC said Sirius had another billion is debt coming due soon. Ergen may still end up with Sirius or its assets at some point in the future. A man has to know his limitations. Ergen knows exactly what he's willing to pay for something and it's a hard line that he nevers crosses. That's why he is financially successful.
 
You have to remember Chrlie took a gamble on the SiriusXm debt purchase.

IF SiriusXm would have filed for bankruptcy Charlie would have lost his arse in the deal.

Score one for Charlie the gambler.

I would not call it score one, he has been gambling all his life, and now is one of the richest guys in the world. He must have scored more than once to get here:)
 
I would not call it score one, he has been gambling all his life, and now is one of the richest guys in the world. He must have scored more than once to get here:)

I guess I should have said score one more for Charlie.

Charlie has made some gables that have worked...some have failed.
 
I guess I should have said score one more for Charlie.

Charlie has made some gables that have worked...some have failed.

but MORE have worked than failed...."nature favors the bold"....and you dont get to be one of the riches men alive but not taking smart calculated and BOLD risk...

we can call him cheap and a lot of other names but one thing charlie isn't....and thats sheepish, weak and dumb. Okay...thats 3 things....:D
 

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