For Sirius (SIRI), chapter 11 looms

Posted Feb 2nd 2009 9:20AM by Douglas McIntyre
Filed under: Law, Competitive Strategy, Sirius Satellite Radio (SIRI)

Sirius XM (NASDAQ: SIRI) is up against debt payments that its management has been saying would not be a problem.

According to The Wall Street Journal, "Sirius XM Satellite Radio Inc. is facing an important test of its viability this month: how it handles $174.6 million in debt coming due Feb. 17." Since the company has not reported its fourth quarter, no one knows for certain how much cash Sirius has. More debt payments are due later in the year.

Could the debt problem this month push Sirius into Chapter 11? It is impossible to tell, but the obligation has not been renegotiated or replaced with new debt.

Sirius may be best off in Chapter 11, given its huge debt load. Without that anchor it could operate more freely. The company's core business may be attractive enough to attract debtor-in-possession financing to get Sirius through the process.

At $0.12 a share, Sirius already trades like it is bankrupt. It ought to look at the airline industry and see how well Chapter 11 can work.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Tags: Chapter 11, Chapter11, Howard Stern, HowardStern, Inthenews, mel karmazin, MelKarmazin, satellite radio, SatelliteRadio, SIRI

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Reader Comments (Page 1 of 1)

2-02-2009 @ 9:40AM

Mike O said...

Sirius has been calling me every week for the last month trying to get me to re-activate my second radio (which I don't use any more). Seems they are trying to get all the cash they can ASAP.