Sirius Debt Problems? Call EchoStar! No Upfront Fees!
by John Paczkowski
Posted on February 6, 2009 at 3:10 PM PT
A quick update on Thursday’s Sirius/EchoStar story. People familiar with the matter tell The Wall Street Journal that the portion of Sirius XM Satellite Radio’s (SIRI) maturing debt that EchoStar (SATS) has purchased is a sizable one. It holds most of the $175 million tranche of debt that matures on Feb. 17 and more than half of a $400 million tranche coming due in December. Grand total: around $400 million.
Just why EchoStar is amassing this debt is unclear. It may be looking to take control of the company outright to gain its physical assets–satellite and terrestrial repeaters (towers that bolster reception of satellite signals). Or it could be setting the stage for some sort of alliance under which it would use those assets to help build a network for delivering mobile video in cars and consumer devices. A partnership is certainly a possibility. As a commenter on yesterday’s post noted, the companies may have an intermediary in former Sirius CEO Joseph Clayton, who sits on EchoStar’s board. Said Janco Partner analyst April Horace, “There clearly is a relationship and some triangularity between Sirius and Dish and EchoStar, taking into consideration that Joe Clayton now sits on the board of EchoStar. Joe knows Sirius like the back of his hand.”
Comments
You might want to check your sources again. I doubt that Echostar has the Goldman Sachs slice of the 2/15 debt. The conversion of $135m would be +1 billion shares of SIRI stock, that SIRI had recently authorized from their stockholders. So we are talking about GS owning a chunk of the company. I don’t think they would give that away.
As of 3/25/08 Joe Clayton had 3.5 million SIRI shares. Although I don’t know if he dumped them without having to report it since he left SIRI.
Although Joe knows SATS, financing has not been his strength. Having sold Frontier to Global Crossing and seeing that wiped out in chapter 11.
Joe is also the guy who signed
Posted by Jeff Stevens at February 7th, 2009 at 5:12 amHoward Stern. Need I say more!