Sirius XM Prepares Bankruptcy Filing

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Tonker83

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Feb 10, 2009
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Just got this from the NY Times, Not looking good.


February 11, 2009
Sirius XM Prepares Bankruptcy Filing
By ZACHERY KOUWE

Sirius XM Satellite Radio has been working with advisers to prepare for a possible bankruptcy filing in a move that could put pressure on the satellite company EchoStar, which owns a substantial amount of the company’s debt.

Sirius has been working with the restructuring expert Joseph A. Bondi of Alvarez & Marsal and the bankruptcy lawyer Mark Thompson of Simpson, Thatcher & Bartlett to help prepare a Chapter 11 filing, people close to the company said. The documents and analysis are close to being completed and a filing could come within days, according to a person familiar with the matter.

Sirius, whose radio stars include the popular shock jock Howard Stern, has also been working with the investment bank Evercore Partners.

Charles Ergen, who controls a satellite-television empire including the Dish Network Corporation and EchoStar, recently acquired the majority of a $300 million tranche of Sirius debt that matures next Tuesday.

Since the news about the debt purchase has emerged, questions have surfaced over whether Mr. Ergen will make a bid to purchase Sirius. The threat of a possible bankruptcy filing could force Mr. Ergen to make a formal offer for the company now if he doesn’t want to go through an auction in bankruptcy court.

It could also compel Mr. Ergen to agree to convert his debt into an ownership stake in Sirius at a higher price than he originally considered.

With more than $5 billion in assets, Sirius would be second-largest company to file for Chapter 11 bankruptcy protection so far this year, according to the research firm Capital IQ’s database. The Smurfit-Stone Container Corporation, which had more than $7 billion in assets when it filed in late January, was the biggest so far.

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