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

To: i-node who wrote (381)	11/23/2002 4:31:57 PM
From: pcstel	Read Replies (1) \| Respond to of 3386

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". Agreed! Which goes to show what a poor position XMSR (and hence it's shareholders) are in! To illustrate this. Not only is GM looking to convert non secure payments due in 2003 into debt instruments, as part of the deal to get relief on the 2003 obligations, they appear willing to give GM conversion on payment obligations well into 2007 (200 million), which according to you, they (XMSR) should be UFCF positive. That is the part that raised my eyebrow when I glanced over the 10-Q If you were making the deal with GM, would you be willing to convert not only 2003 and 2004 obligations into interest accruing debt. But, also interest accruing debt on 2005 thru 2007 payment obligations? In my mind, issuing stock right now would be devastating, whereas giving GM some security costs nothing Well, except accrual of interst (but we will have to see the terms to make a call on this), but why would you let them convert furture payments due 4 years down the road into interest accruing debt TODAY ? 2003 and 2004. No problem! But, 2005, 2006, 2007? So, like you said. GM gets security of out the deal. But, that would give me kind of an uneasy feeling knowing they wanted debt instead of stock at these prices. 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. Yeah! Post-Petition DIP Financing is a bit tricky these days. That is, without losing the whole thing in liquidation. But, you raise a point. If you don't think someone would cough up some "fairly secure" DIP financing due to the lack of viability of this issue at this time. What makes you believe that anyone is going to front Pre-Petition financing at this time? I mean if you really want to invest in the company. It's better to come in with your cash as a DIP, rather than sitting in line as a un-secured debtholder along with the other shmoes that wrote pre-petition debt. (Bondholders, CCU, GM, Hughes, Boeing, et al). So additional funding from GM seems out of the question. Since they will in effect get a 200 Million debt claim for nothing more than promised future payments due. So why would someone write 200 Million in debt instruments in exchange for cash today? When GM gets future (years out) non-secure payments swapped for debt? Why wouldn't they just circle overhead waiting for the carcass to be tossed in? Why wait in line with the other pre-petition debt holders for the scraps left over when they can just wait a couple of months and provide DIP financing? PCSTEL