A Bankruptcy Filing, Mel? Surely You Can’t Be Sirius…
by John Paczkowski
Posted on February 10, 2009 at 5:20 PM PT
Looks like Mel Karmazin, CEO of embattled satellite broadcaster Sirius XM, would rather file for bankruptcy than yield partial control of the company to Charlie Ergen and Echostar (SATS).
“People close to the company” tell the New York Times that Sirius may be days away from filing Chapter 11.
From the Times:
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.”
Or not. A bankruptcy filing would wipe out shareholders, among them Karmazin, who invested $2.7 million in Sirius (SIRI) stock last summer. And with Ergen’s offer reportedly still on the table, it would expose Sirius’s management to shareholder lawsuits. So perhaps the threat of a possible bankruptcy filing made through the media is a bluff to force Ergen’s hand. After all, just because the company has hired bankruptcy and restructuring advisers doesn’t necessarily mean a filing is imminent.
Sirius shares, which had been trading a bit higher than their typical 12 cents a share, have fallen deep into the mud on the news. They’re down more than 40 percent to six cents as I write this.
A nasty price for shareholders to pay if this is truly a high-stakes game of chicken….
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