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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR) -- Ignore unavailable to you. Want to Upgrade?

To: pcstel who wrote (380)	11/23/2002 2:45:34 PM
From: i-node	Read Replies (1) \| Respond to of 3386

You may get your non-dilutive funding. But, that is not necessarily a good thing. I would agree it is not NECESSARILY a good thing, but when the stock is trading at or near its lows you really don't want to be selling more shares. When your investors start restructuring non-debt related payment issues into secure or un-secure debt. Then this can be seen as a sign that they are positioning themselves for a restructuring. There would be little reason for GM to agree UNLESS they were getting security out of the deal. XM really has nothing else to offer: "How about this. You let us take longer to pay you off and in exchange we give you nothing." The only carrot XM has is to say, "give us the time, and we'll make you a secured creditor; otherwise, if the company fails, you could get zilch". If I were making the deal for XM, that's precisely the way I'd be going at GM. I would also be working toward some kind of consortium amongst commited auto manfacturers as they have the most to gain -- Honda, GM, to provide debt financing. I have a great deal of confidence in XM's management -- they've done everything just right throughout the startup period. I see this getting resolved in the next couple of weeks... Moral to the story: When you investors/partners start moving items which would be classified as non-secure creditor items into debt instruments. They probably know something they aren't telling you! Often, when there is a troubled debt restructuring, the debtor has little to offer EXCEPT for a better positioning for the creditor. In my mind, issuing stock right now would be devastating, whereas giving GM some security costs nothing (if the company fails later, the stockholders leave with nothing anyway). Further, I don't see a chapter 11 happening here because the company isn't viable at this time without additional financing (a bankruptcy judge can put creditors off, but he can't force them to lend additional money). Unless they could get someone to provide financing whilst in chapter 11 (pretty tough to do, I'd say) then they would just have to close the doors.