SaveSirius, a group of shareholders that is accusing Sirius XM Radio Inc. of unjustly enriching themselves, served formal letters of demand to the company's Board of Directors recently.
The group demands that the company:
- Postpone the vote to increase the number of shares of common stock (from 4.5 billion to 8 billion)
- Delay the proposed reverse split, ranging from 1 for 10, to 1 for 50.
- Suspend all stock compensation plans and other bonuses immediately
Read the entire letter sent to the Board after the jump...
SAVE SIRIUS
P.O. Box 7078
Laguna Niguel, CA 92607
949-795-0580
P.O. Box 7078
Laguna Niguel, CA 92607
949-795-0580
November 5, 2008
Gary Parsons
Chairman of the Board
c/o Board of Directors
Sirius Satellite Radio, Inc.
1221 Avenue of the Americas
36th Floor
New York, NY 10020
Sub: Formal Letter of Demand
I am a shareholder and a member of the recently formed shareholders' group, Save Sirius. Save Sirius and its members, in this Formal Letter of Demand, call on the Sirius XM Board of Directors to:
- Postpone the vote that is asking shareholders to consider the further dilution and increase of shares from 4.5 billion to 8 billion in the fully diluted float
- Postpone the proposed reverse split ranging from 1 for 10 to 1 for 50.
- In light of the abysmal stock performance and dire financial situation, we demand that all stock and other bonuses be suspended immediately until the return to these compensation plans would be commensurate with the concept of "performance based compensation"
Given the NASDAQ's reprieve of delisting securities below a dollar, there is time for this board to convene an emergency meeting to consider other options, such as but not limited to, self-funding by shareholders. This will give the Corporation time and means to obtain the additional funding from a position of strength and not from a position of desperation.
We are calling on the board to indefinitely postpone the shareholder vote giving time for management and its shareholders to address any and all viable options to prevent the massive amounts of dilution being proposed by this board as well as the proposed reverse stock split. We demand the board grant a meeting with all interested parties to address alternatives that would be more in line with shareholders' interests.
If the board continues with the scheduled vote, not meeting our demands, we will hold them in violation of their fiduciary duties and seek injunctive relief.
As the board is aware, there are (RICO) charges pending before a Federal Court in California that accuse this board and its executives of racketeering, breach of fiduciary duty as well as Sherman Act Violations.
The conspiracy to withhold and commercially introduce interoperable radios, to obtain control of all of the SDARS spectrum and to consummate the merger between XM and Sirius at any and all cost, without consideration of the impact on the corporation and its shareholders, gives us cause to deem this board not fit to make proper decisions on behalf of the shareholders.
It is inconceivable that this board would lock their shareholders into the longest merger delay in history without having already obtained the proper financing. This board and CEO Mel Karmazin, publicly stated on multiple occasions that if this merger was not in the shareholders' best interest and "did not make sense", they would walk away. The fact that the promises made to the shareholders were breached and that
this merger was consummated under what Mr. Karmazin called "toxic terms" has resulted in catastrophic losses (over 90%) in shareholder value. It should be noted that the "toxic terms"( included the issuance of 300 million shares of the Corporation stock to be given to the financiers of XM's debt for the sole purpose of being sold short on the open market). It is clear that this board is self dealing and it has not fulfilled its fiduciary duty to shareholders.
This has been a well-orchestrated multi-year conspiracy to consolidate the SDARS spectrum which included willful violation of their licensing mandate as well as willful violation of their Joint Development Agreement. The final chapter in the conspiracy will be to privatize the combined entities thereby stealing it from its rightful owners, the shareholders.
Mr. Karmazin was brought out of retirement by Mr. Leon Black of Apollo, a member of the board. In a September 15th 2008 Wall Street Journal article written by Sarah McBride, she states,
"Given Sirius XM's low stock price, Mr. Karmazin said he would love to take the company private. But given the state of the credit markets, 'How do you find [the money] today?' If the company were generating positive cash flow, which he expects it to do for the full year in 2009, privatization would become much more feasible, he says."
Given Mr. Karmazin's connection with Mr. Leon Black (founder of one of the largest private equity firms in the country), as well as comments made in his Wall Street Journal interview, it is obvious there are severe conflicts of interest between Mr. Karmazin, the board, and their shareholders. It is their goal to privatize this company that is completely adverse to their fiduciary responsibility to enhance shareholder value. To suggest privatization at these levels speaks for itself and the board should call for Mr. Karmazin's resignation. We are asking those board members who have been complicit in this conspiracy, to step up and perform their fiduciary duty to we the shareholders, by seeking an orderly replacement of our CEO. We would like to take this opportunity to remind the board and executives of SiriusXM that they work for us. It is we, the shareholders, that own this company.
As stated above, if the board continues with the scheduled vote, not meeting our demands, we will hold them in violation of their fiduciary duties and seek injunctive relief. As time is of the essence, we expect a written response within five days from receipt of this letter. Your failure to respond accordingly will result in drafting of the required documents to seek a preliminary injunction.
Respectfully submitted on behalf of Save Sirius:
SaveSirius@gmail.com SaveSirius.org
Unfortunately, I don't think the letter is going to do much good. Most of these people probably own 10, 100, 1000, or maybe 5000 shares of stock. They are going up against those that own millions of shares of stock. It's like an elephant brushing away the flies with it's ears. They can be annoying at times but nothing more. Don't get me wrong. I hope these shareholders have success in the their endeavor but like most big corporations, they don't care much about the little people.
Well I own 15,000 shares of stock. I know it's not much, but I voted against the split, against offering more stock, and against Gary & Mel.
Now, how do I join SaveSirius?
I hope this does good. I think we are getting screwed here, but sadly I have my doubts that Michael will succeed. Mainly because he is up against a huge corporation with way too much power.
I'd like to see documentation on their offer of $500,00 to him. I think if theres concrete evidence of that, it would help get the media interested.
if he can use the media to fight this, he might have a chance. and the good nes for him is tha the NAB would probably love to bash siriusXM
In the end though, I suspect that shareholders lose either way.
One thing that doesn't help the shareholder vote is the fact That I never get the proxy notice until its too late. (i cannot recall even getting the proxy) I have requested it from my broker ( vanguard) but they say I have to get it from sirius. I try sirius, but get nowhere when I contact them...
I am sure there are many investors out there like me who don't get the proxy in time so the company uses those votes as a yes.
Why give this crank any publicity or credibility?
I admittedly don't understand fully how the stock market works in these situations. But, am I reading correctly that the insinuation is that Mel and Co. is almost "purposefully" driving the price of the stock down so that he can then sell the company and privatize it? If that happens, then all us shareholders get paid out at the current crappy stock price and cement the loss? Is that correct? If not or if so, can someone explain?
thanks.
Max - Fox gave this guy their attention so it's debatable that you could call him a crank.
http://www.foxbusiness.com/video/index.html?playerId=videolandingpage&streamingFormat=FLASH&referralObject=3183806&referralPlaylistId=1292d14d0e3afdcf0b31500afefb92724c08f046&maven_referrer=staf
I as an investor have my suspicions about siriux management based on how Mel has made statements about what he plans to do and then when he gets what he wants, totally leaves shareholders out to dry.
Obviously it's hard for me to have an unbiased opinion since I am down over 60 grand, but I'm reserving my jusgement on Michael until its all over.
maybe I should join these guys. I got my proxy, voted against the split and the share increase, and I also voted for all the board except for Mel. :)
your proxy should be easy to access from your broker's website and/or stock email/newsletter.
Yeah. Sure.
This letter sounds like it's written by a paranoid wack-job. The Board isn't going to pay attention to a few angry shareholders with an ax to grind and a petition filled with conspiracy theories. They've got enough to worry about as it is.
Please. Don't hold your breath.
I'm having a hard time understanding why so many shareholders are not concerned with the delisting possibilities. I would imagine that a reverse split is a better option than getting delisted no?
no - because:
a reverse split guarantees that I lose most of my investment (68k)
at this point a reverse split may as well be a declaration of bankruptcy because if you do the 50-1 reverse split, the share price has to go to over 300.00 for me to break even.
Id rather see the company crash and burn than to survive at the expense of my 60,000.00.
First, a reverse split does not guarantee that you lose your entire investment. If you honestly believe that you lost your investment because of this reverse split then maybe you shouldn't be investing in the market.
Yes, a 50-1 reverse split means the amount of shares you own are divided by 50 but the share value of the stock is multiplied by 50, and the market cap of the company stays THE SAME.
After the split it would be just as easy for SIRI to get to $300/share as it would be for it to get to $6/share without the split. It's all about the market cap and the value that people see in the company.
Ill ask this question again.
How could mel K. possibly had known when he took on what is called toxic debts in this letter that the credit markets would plunge and lock up?
How could mel K possibly know it was going to take so long to get the merger done?
The merger wasnt a benifit accourding to this filing. Im going to bet that someone appreciates the benifits of the companies Subs doubling and the cost savings that the company has already seen.
The stock has taken a beating, We are all feeling it. Some more than others but we are all feeling the crunch. Guess what, Apples shares went from 200 to 85. Does that mean you hear people on their boards threating to sue?
We all know that the 3rd quarter report was fairly solid and the company is reaffirming its numbers. We know that the only thing holding this stock in these levels is debt.
I just dont buy into the conspiracy theorys. If we get the debt refinanaced we will all be fine, If not we are all pretty much screwed.
I agree that Mel could not have known about the credit markets plunging, but he did issue the extra shares right after the merger that totally killed the bump. he also said a revers split wasnt on the table and now theyre talking 50-1 reverse split.
I dont think theres a committee sitting in a dark room plotting ways to screw over the shareholders.
But I do think Mel says what he think needs to be said in order to get done what he wants. and if later he has to do something that contradicts what he said earlier, it doesn't bother him a bit that shareholders might get screwed by his actions.
Mel's agenda is to make Sirius XM a profitable company.
He doesn't care one bit about pleasing shareholders. Sadly that's just the way business goes these days.
"After the split it would be just as easy for SIRI to get to $300/share as it would be for it to get to $6/share without the split. It's all about the market cap and the value that people see in the company."
In theory you are correct, but stock prices are pretty much subject to the whims of investors and I suspect that somehow a $6 share price is way more possible than a $300.00 share price.
Also, after a split a $15.00 share price could drop back to $1 and then whats to stop another reverse split???
Why do a reverse stock split in this economic environment? Don't you then give the shorts another raid opportunity to ride it all the way down to 0? We're practically there already with no good news on the horizon for another year, year and a half, with analyst downgrades and periodicals who are piling on the negative stories to boot!
wait, when were proxy's sent out for a vote on a split?? I own about 500 shares and am surprised I wasn't sent anything. Don't they legally have to send me something? Kind of BS.
Face the facts ladies the turd better known as SiriusXM is cooked, done, and ready to be sh*t out.
I have more than 5000 shares and I voted No
I DO NOT UNDERSTAND THE MECHANICS OF TAKING A
COMPANY PRIVATE, HOWEVER, I CAN TELL YOU THAT THERE IS ABOLUTELY NO WAY THAT MEL'S NAME COULD BE ATTACHED IF THAT WERE TO HAPPEN. POSSIBLE PAYOUT FOR HIM?? WHO KNOWS? ONLY IF THE SHAREHOLDERS WOULD BENEFIT COULD MEL'S NAME BE ASSOCIATED WITH THE NEW ENTITY,OTHERWISE,HE WOULD HAVE TO SECRETLY TAKE A SILENT POSITION. HE IS NOT THAT TYPE...HE WANTS TO PROVE MANY PEOPLE WRONG AND YES HE HAS MADE BAD DECISIONS,HOWEVER, I DO NOT THINK THAT HE WOULD HAVE PUBLICLY CAME OUT WITH HIS INTENTION OF WANTING TO TAKE THE COMPANY PRIVATE UNLESS THEIR WAS A BENEFIT FOR ALL. CAN YOU IMAGINE WHAT OTHER KINDS OF LAWSUITS WOULD BE FILED????????????????
Anyone that thinks BK is a better option than a R/S is a complete and utter moron. I do not think either is needed at this time. Having the option to do so is an important step in having the time to get the share price up, in the event NASDAQ resumes the $1 limit for securities after Jan 20th.
A R/S leaves you with a chance to sell and hold onto your shares. BK will leave you with nothing.
One thing is for sure and that is, that the Fox Business News Anchor did a horrible job of interviewing Mr. Hartleib. She didn't help inform us at all by asking decent questions.
you can sign up for e-voting - i did this and finally got my control # from vanguard in time to vote against the current shareholder screwing proposals.
I also witheld my vote for mel k.
not that it really matters but it felt good to have the illusion that i may have had an impact :-p
all i can say is if shareholders approve the reverse split and massive dillution of the stock, we have to be the dumbest group of suckers on the planet!
please god! show some mercy on us and dont let mel have his way with us!!!
I sent mine certified mail. I would suggest everyone else do the same.
Label/Receipt Number: 7008 1830 0001 7150 8658
Status: Delivered
Your item was delivered at 11:39 AM on November 13, 2008 in NEW YORK, NY 10020.
Does anyone have a RELIABLE count as to how many subs this company really has? Not the Mel math that counts cars sitting in lots with unused radios. Can we get a RELIABLE count of how many people have been cancelling since the switch?
Paul,
I am glad that you brought up this point; I have always been very skeptical about the sub numbers. It is bullshit to count dead radios in cars sitting in lots for months. I'm sure they will "doctor" the cancellation numbers, especially if they have been lying about the subscriptions. Honesty and ethical conduct does not seem to be one of their virtues!
Also, after a split a $15.00 share price could drop back to $1 and then whats to stop another reverse split???
Absolutely nothing, and it's more likely than it going to $300. Welcome to the wonderful world of reverse stock splits.
I called the XM customer last Thursday, a day after the switch and requested a cancellation of my subscription. They said they had to transfer me to the cancellation department. I was left on hold for at least 20 minutes, so I decided to call back. When I did finally get around to calling back, they asked why I was cancelling and responded that the merge had ruined what was once good programming. All of the stations that I listened were either retired or replaced. They gave me a phone number at one of thier corporate offices to call and let them know my reasons. I did make the call and explained and was told that someone will contact me. I am still waiting for a call back (its been 5 days). I gave Sirius/XM every opportunity to try expalin the situation and they left me hanging not once but twice. Was this a ploy to stall the inevitable or are things really that screwed up, either way I cancelled my subscription this morning.
I am sorry but it looks like it is time for some changes on top. Fine the merger took sometime but as a shareholder I am very dissastified the way this company is being run to the ground.
don't you people realise that howard and mel are the only shareholders that matter
What is Googles revenue in a quarter 1.57 billion = 5.00 a share?
They are at 300.00 a share!
314 million shares
Sirius 3.5 billion shares, 1 for 50
70 million shares
750 million in revenue per qtr / 70 million shares
10.71 dollars per share per qtr!
current share price .21 x 50 = 10.50 per share
So you are saying that Sirius won't hit 200.00 to 300.00 dollars a share!
Do you guys not understand that a stock split, reverse or otherwise, does not affect your investment in any way?
If you have a pie cut into 10 slices and you have 2 of them it is precisely the same as a pie cut into 5 slices and you have one. That's what we're talking about here.
Karmazin (with the help of Clayton before him) and Parsons flew these companies into the ground. They're not coming back. Anyone who thinks Sirius shares are ever going back to $6 is dreaming. Not happening.
You just did revenue per share, earnings per share is what matters. And in terms of earnings, Google is in a much better position.
Overall though, they now have about 18.9 Million subscribers either paying every month or already paid up for a year or two! Didn't they say they'd break even at about 8M? Didn't Sirius have a Christmas quarter in the black (in terms of cash flow) two years ago? MAKE THIS WORK! They just laid off 30 more people. I hate to say this, but shouldn't this company be looking to eliminate about half its employees right now? Try to keep it to people behind the scenes and listeners won't notice the difference. It's a shitty world.
Their only goal should be to get their cash flows back above sea level. Cut like maniacs, keep subscribers happy (even if it means simulcasting the exact same stations with different station bumpers on XM and Sirius so morons like the guy above won't cancel because their '70's rock station is now another, nearly identical '70s rock station with a different name), and revisit those debt obligations, agreements can be reopened. Do lenders really want to push hard for what was promised and get nothing if the company files for bankruptcy, or can they wait a bit and get everything they were promised? These discussions happen every day.
And Mel, as genius as he is, needs to stop acting like an asshole. Stop these reverse splits, new stock floats and "the merger didns't work" bullshit rumors. EVEN IF THEY'RE TRUE, SAY THINGS ARE ON TRACK! For fuck's sake, market confidence is in the basement, say we're now cutting down on duplicate processes and are about to hit black. Say GM (and everybody's elses) dip in sales doesn't hit us too much because we now have enough subscribers to make it work.
Good luck guys, I own stock too. I see 18.9M people paying monthly for a service, that's massive! They have to make this work!
18.9 million subscribers? Is this paid subscriptions? I understand that most new automobiles sold offer 1-2 year free subscriptions in order to boost the numbers. Unfortunately most of these "subscribers" cancel at the end of the free period. If you call to cancel your subscription they are now offering 3-6 months free or a second radio for free, all in an attempt to boost "subscribers". Does anyone have an accurate number for paid subscribers?
You know, I'm not prone to paranoid thoughts... but I really hope there isn't anything to these comments that Mel is fine with the price dropping because it creates a good buyout opportunity. In truth, I'm not interested in being locked in at a loss, not that I have nearly enough voting clout to keep myself in the game if it comes to a vote. If it does though, let's fight that one.
And yes there is some frictional subscribers with those free promotions, but man, did you just say "MOST" of them? That's ridiculous. You think there are over 9.5 million cars that just got sold with those free promotions? I don't know an exact figure, but it sure as anything isn't "most," or even close to that.
It's hard to tell about the actual subs. Sirius "execs" have been known to cook books in the past - from what I have heard and read. And Mel is one of them. Sirius used to (and probably still does) count cars that were MADE with the radio in them, sitting on a lot, waiting to be purchased. XM didn't do that. Because of that, their "sub numbers" before they merged, were not apples to apples.
i was very happy with my xm radio. i chose xm over sirius because of the programming and am now very disapponted due to the fact that since the merger i now may as well say i have sirius because all not 1 or 2 of the channels i like but all have been replaced.
the main one is america being replaced by roadhouse. roadhouse is supposed to be classic country but since when is olivia newton john country let alone classic???
also it may be comercial free but they constantly advertize other channels.
i thought openroad might be a good channel but quickly got tired of the jb hunt comercial on that station.
i for one am very unhappy with the merger and would swear i remember them saying during the merger push that my programming wouldnt change i would just have the opertunity for more programming options.
at this point its just a matter of desiding if i want to stay on or cut my losses and im leaning to the later.