Shares of a satellite radio provider surged Friday after it reached an agreement to defer its debt payment, and no, we're talking not about Sirius XM Radio Inc.Indeed it was Washington D.C.-based Worldspace Inc. that jumped up more than 101% to $1.71 on Friday after the satellite radio provider announced that it has reached an agreement in principle to defer its debt payment.
The company reached an agreement with each of the four holders of its amended and restated secured notes and second amended and restated convertible notes to defer its obligation to pay $19.97 million in principal amount of the bridge loan notes until September 25th, plus accrued but unpaid interest due on the notes, which was payable on September 15th..
WorldSpace said that it's working on developing a comprehensive operational and financial restructuring plan to address its immediate and longer term financing requirements.
If the winds of positive news can change for WorldSpace, maybe Sirius XM won't be too far away?
doubtful...
Shares have closed under $1 for more than a week now, opening the door to the possibility that a Nasdaq delisting notice -- which gives the company six months to shape up or ship out -- could soon follow if the stock were to remain at these levels for another three weeks.
Even though the company will likely continue to operate its satellite radio programming as shares spiral further and further towards zero value, Sirius XM shareholders will be the ones left holding the bag.
Sirius XM has the unenviable task of handling more than $3 billion in debt, with just more than $1 billion of that pie coming due in 2009.
Nearly five years ago, Sirius issued $300 million in convertible senior notes that will represent the first milestone debt repayment when they mature in February 2009. The company has given no indication how it will meet that obligation.
Beyond that, Sirius XM has hopes of extending the maturities of another $350 million in debt due in May, and it also expects to refinance the $400 million in XM convertible debt that comes due in December.
Both Sirius and XM functioned historically with negative cash flow, a combined Sirius XM will certainly not have enough money on hand to manage its debt unless it has a positive cash flow. (which it never will)
it will prove to be extremely difficult for Sirius XM to secure $1.05 billion to get these repayments financed. Combine a credit rating of CCC+, or junk status, with its situation classified as "developing" by Standard & Poor's, and it becomes more and more unlikely Sirius XM will function the way many expected it.
"We have certain concerns about Sirius XM's cash balance in 2009 in light of the GM debt facility going away, along with Sirius XM's satellite capital expenditure commitments of $120 million, and the refinancing of another $1.05 billion of debt," said April Horace, analyst with Janco Partners, in a research note. "In light of the credit markets, refinancing the debt could be difficult or unachievable."
"Our current simplified forecast has Sirius XM's cash balance excluding any changes in working capital ... could decline to $90 million, which seems awfully low, especially given that we have not factored in any severance payment, merger costs, or banking costs," Horace says.
One dire prospect for shareholders is that Sirius XM will further dilute shares through future public offerings. On the eve of announcing the closing of its merger to XM, Sirius sold nearly $375 million in common stock in a fixed-price public offering, with up to another $65 million more to come later concurrently with a private offering by XM.
Thus, on a day when investors should have been celebrating the completion of the long-awaited merger, they were instead licking wounds brought on by the share dilution.
Worldspace's debt of $19.97 million is just pocket change compared to the debt Melvin Alan "Mel" Karmazin has created via his "merge" scheme
SIRI should rebound if we get news like this....
http://vfcsstockhouse.blogspot.com/2008/09/siri-loaded-with-debt-shorts-have.html
I just don't see where World Space has a chance. Anybody else see it any other way. Just not adding subs fast enough.
who ever the moron is that posts mel's full name all the time...
You're stupid. Seriously, you're an idiot
hahahaha