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Old 08-04-2005, 12:26 PM   #1
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Default $500 Million Shelf Registration

So, now that Sirius has borrowed a half billion, they file a shelf registration for ANOTHER half billion?

http://www.shareholder.com/sirius/Ed...3079&SID=05-00

If this doesn't have Sirius shareholders shaking in their boots there are no limits. They can issue shares as fast as they can print them and nobody will notice.
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Old 08-04-2005, 10:07 PM   #2
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Correct me if I am wrong on this point, but in essence, isn't Sirius basically borrowing money at a cheaper interest rate to pay off higher rate bonds??? I think they currently have some 15% bonds, and now the rate they are getting is somewhere near 9.5% Its not that they are going to borrow money for the sake of having it, they are borrowing to pay off higher rate bonds.
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Old 08-04-2005, 10:19 PM   #3
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Correct me if I am wrong on this point, but in essence, isn't Sirius basically borrowing money at a cheaper interest rate to pay off higher rate bonds??? I think they currently have some 15% bonds, and now the rate they are getting is somewhere near 9.5% Its not that they are going to borrow money for the sake of having it, they are borrowing to pay off higher rate bonds.
If only that were correct. That is certainly the picture they tried to paint. But a review of their balance sheet reveals that the bonds to paid off amount to some 58 million:

http://www.shareholder.com/sirius/Ed...3073&SID=05-00

14 1⁄2% Senior Secured Notes due 2009 $28,318,000
15% Senior Secured Notes due 2007 $29,200,000

The remaining $442 million is for "general corporate purposes" (i.e., getting to CFBE, hopefully).

It should be pointed out that the $500 million shelf registration provides for an ADDITIONAL round of $500 million, if needed.
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Old 08-04-2005, 10:31 PM   #4
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Front Med, thanks for the link to the place where the notes were listed. I do feel like we were a bit misled, or maybe it was the way I interpreted the statement. I would have thought that the notes carried a higher balance since they were raising so much money.

With that being said, I hope that they will be using this excess cash for an extra satellite. This has been discussed, and I think this would be a good use for the money.
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Old 08-04-2005, 10:42 PM   #5
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With that being said, I hope that they will be using this excess cash for an extra satellite. This has been discussed, and I think this would be a good use for the money.
This cash was necessary to get to CFBE. If they do decide to launch another satellite, they'll need to either borrow more or issue some stock. If they don't launch another satellite, there is probably at least a 50/50 chance this round of financing will get them to CFBE, so that's good.
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Old 08-04-2005, 10:51 PM   #6
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they were already fully funded, or very close to being fully funded to CFBE before this extra round of financing. With this new money, they will certainly, 100%, be fully funded to CFBE if this is not used for another satellite. Forget about your 50/50 estimate.
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Old 08-04-2005, 10:52 PM   #7
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they were already fully funded, or very close to being fully funded to CFBE before this extra round of financing.
Not even close.

They're burning between 70 and 120 million a quarter. They had 500 million. That's 5 quarters' worth of cash.

They will not hit CFBE before '08.

This isn't guesswork for me.
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Old 08-04-2005, 11:05 PM   #8
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they generated 52 million in revenue in Q2, and by Q4 of 2006, they could see upwards of 140 per quarter.. That would seem to be break even for me.....
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Old 08-04-2005, 11:26 PM   #9
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they generated 52 million in revenue in Q2, and by Q4 of 2006, they could see upwards of 140 per quarter.. That would seem to be break even for me.....
I hear you.

But $600 mln in revenue doesn't even get them close.

Look at it this way. Customer care plus programming/content is, today, running 1/3 of revenue. These are expenses are very much directly variable with revenue. So, at $600 mln, you have $400 mln left after these expenses. You have to pay Stern $100 mln. You have to pay Martha, Jimmy Buffett, and others, who aren't included in the current 1/3 variable expense. About $150 mln a year would be a good guess. So, you have 250 mln left to pay other cash expenses. This includes SACs, G&A, Satellite/Terrestrial -- expesnes running $325 mln even today. They're only going up (in total), although there is a nice fixed component to some of these costs. Also, unit SACs will drop over time, but it hasn't been quickly enough thus far and I would not assume too much.

I would not rule out a late '07 CFBE *IF* eveything aligns just right. I think Mel is doing some stuff right that could make this happen. But it is going to be close. They'll be fairly low on cash when they get there, though.
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Old 08-05-2005, 12:10 AM   #10
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Front Med, I can see your viewpoint, but I must say that I just disagree. You have been bashed quite a bit on here, but I think that you do not deserve it. You have your opinion, and thats fine. It just differs from most other people on this board.

I was lying in bed thinking about this, andI have to increase my revenues for Q4 2006. Lets say on average they have 5.6 milion subscribers for the quarter. I am basing that number on my belief that they will have more than 6 million for the end of 2006. Each subscriber is worth about 10.50 each month. 10.50 X 3 months X 5.6 million = 176 million alone. Then throw in advertising revenue, sirius direct sales and we could be well over 200 million in revenue for the quarter.

If you think 5.6 million subscribers is too high, lets just use 5 million in place of that...... 10.50 X 3 monthsX 5 million = 158 million rounded up. AND, this is important to note, I am using 10.50 average ARPU, which could easily increase between now and next year with all of the premium services to be offered, and, I am using an AVERAGE of 5.6 million and 5 million respectively for the quarter.
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Old 08-05-2005, 12:40 AM   #11
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Originally Posted by joesal905
Front Med, I can see your viewpoint, but I must say that I just disagree. You have been bashed quite a bit on here, but I think that you do not deserve it. You have your opinion, and thats fine. It just differs from most other people on this board.

I was lying in bed thinking about this, andI have to increase my revenues for Q4 2006. Lets say on average they have 5.6 milion subscribers for the quarter. I am basing that number on my belief that they will have more than 6 million for the end of 2006. Each subscriber is worth about 10.50 each month. 10.50 X 3 months X 5.6 million = 176 million alone. Then throw in advertising revenue, sirius direct sales and we could be well over 200 million in revenue for the quarter.

If you think 5.6 million subscribers is too high, lets just use 5 million in place of that...... 10.50 X 3 monthsX 5 million = 158 million rounded up. AND, this is important to note, I am using 10.50 average ARPU, which could easily increase between now and next year with all of the premium services to be offered, and, I am using an AVERAGE of 5.6 million and 5 million respectively for the quarter.
To get to CFBE you also get to count the average pre-pay which can be a substantial amount of cash since I think around 70% choose to pre-pay a year or more in advance.
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Old 08-05-2005, 08:30 AM   #12
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To get to CFBE you also get to count the average pre-pay which can be a substantial amount of cash since I think around 70% choose to pre-pay a year or more in advance.
Well, yes, you do. SIRI's average prepay right now is about 9 months.

But you also pay the SACs/CPGA now. So, when a subscriber comes onboard, you the 9 months plus the activation fee, but you spend a few hundred dollars in CPGA. You're in the hole at minute one.
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Old 08-05-2005, 09:07 AM   #13
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I wish the folks at Sirius would learn to tell the truth.

Didn't Mel tell us 6 months ago that they had enough money to get to CFBE and that they wouldn't need to raise more funds?

How about instead of raising money to spend more moeny they cut costs?
That would be a nice change of pace.
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Old 08-05-2005, 09:57 AM   #14
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Didn't Mel tell us 6 months ago that they had enough money to get to CFBE and that they wouldn't need to raise more funds?
Not even six months ago -- six weeks ago.

This is the most disturbing aspect of it to me. I thought when Clayton left we were entering a new era of integrity and competence. At the Annual Meeting, Clayton clearly stated that Sirius was fully funded to CFBE and would not return to "the public markets" for cash.

The insufficiency of the cash was obvious, in fact, glaring. But still, I thought maybe he had some private source of financing lined up. At any rate, this deliberate [and successful] attempt to mislead shareholders has be totally re-thinking the situation with Sirius. I had strongly believed that the lapses of integrity were gone with Clayton.

Right after Mel came onboard, there was the Midnight Toyota PR which was horribly deceitful and misleading and still has most Sirius shareholders confused even today. But I really thought Clayton was responsible for it, as Mel was only days on the job.

Someone needs to call Mel to answer on this. Nobody did at the CC.
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Old 08-05-2005, 11:34 AM   #15
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To get to CFBE you also get to count the average pre-pay which can be a substantial amount of cash since I think around 70% choose to pre-pay a year or more in advance.
Well, yes, you do. SIRI's average prepay right now is about 9 months.

But you also pay the SACs/CPGA now. So, when a subscriber comes onboard, you the 9 months plus the activation fee, but you spend a few hundred dollars in CPGA. You're in the hole at minute one.
What about the renewals where the SAC/CPGA is already a sunk cost? That is cash flow that helps cover the "nut"
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