How is Sirius XM doing?

Sirius XM has come to a point to stream their contents to Apple’s iPod and iPhone in Spring 2009. Recalling that iPhone has changed their pricing policy, it is actually a good sign for Sirius XM. Sirius’s previous auto market is in danger and they can’t afford to see subscribing number free fall anymore (they have never made any money). It’s fourth quarter has $248.5M loss, better than $405M a year earlier. The CEO said it would book a $300M EBITDA earnings in 2009. This should be treated cautiously though given the auto market is diminishing. The key is to see if subscriber loss. The bottom line is that Sirius doesn’t have danger of bankrupt in 2009. They also need to change their business model. It would be difficult to roll over its huge debt again and again at low rates in the foreseeable future until it can make a profit.

Some compiled facts about Sirius XM:
$5B in assets, $3.25B in debt, 20M subscribers or $2B revenue, CEO Karmazin bot 2M share at $1.37 in August 2008. Before that, he had purchased 20M at average price $5/piece. That means he had put in over $100M.

Sirius and Liberty Media nailed a deal to fund its current debt in Feb 2009. Here is that deal.
$250M term loan to Sirius from Liberty Media, funded on 02/18/09. Interest rate is 15%/yr till 12/20/2012. A second loan to Sirius is a $30M purchase money loan, also with interest rate at 15%/yr till 12/20/2012.

A separated loan to the old XM Radio and Liberty Media is made with different terms:
Liberty Media will provide a $150M term loan, not closed with subject to conditions with interest rate of 15%/yr till 05/01/2011. Conditions mean renegotiation of XM’s other credit agreements to extend their terms and Liberty’s going out and purchasing in the market another $100M of this debt. The second loan is also conditioned on Sirius’s auditors’ not issuing any “going concern” opinion on the company with respect to its 2008 audited financials. A “going concern” caveat in an auditor opinion is code that a company is likely to go bankrupt without additional financing.

As a result, Liberty Media receives 40% stake in Sirius in connection with the second loan. The stake is in the form of 12.5M shares of convertible preferred stock in Sirius. Upon clearance, the stock becomes convertible into common stock of Sirius.

Siruis needs to pay $175M on convertible notes on 02/18/09. $400M debt will be due in 12/2009. It is no danger after these two loans in 2009.