Is Sirius In EchoStar's Crosshairs?
February 5, 2009 at 5:16 AM (PT)
CHARLES ERGEN's ECHOSTAR CORP has quietly accumulated a substantial portion of SIRIUS XM SATELLITE RADIO INC's maturing debt in what could be the first salvo in an attempt to take control of the company, writes REUTERS, citing a Wall Street Journal report. ERGEN, who controls a satellite-television empire around DISH NETWORK CORP. and ECHOSTAR, recently acquired part of a $300 million tranche of SIRIUS debt that matures on FEBRUARY 17th, sources told the paper.
SIRIUS recently converted part of the debt to equity, reducing the total debt outstanding to about $175 million. It is not clear whether ERGEN participated in the exchange, the paper said, adding that he could also be buying up senior bank debt, due in MAY, which trades on the over-the-counter market.
ECHOSTAR could be pursuing a plan to use the debt as a way take control of the company either inside or outside of bankruptcy, the JOURNAL said.
According to STANDARD & POOR's, SIRIUS has $175 million of convertible notes maturing in FEBRUARY, $350 million of secured bank debt due MAY 2009, and $433 million in convertible notes due DECEMBER 2009.
In DECEMBER, SIRIUS CEO MEL KARMAZIN said that while the tight credit market has made it difficult to get optimal terms, he is confident the company can refinance the debt.