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

To: pcstel who wrote (556)	4/23/2003 11:59:39 PM
From: i-node	Read Replies (1) \| Respond to of 3386

Do you make people who will owe you money in 2006 for services that really won't be tendered for a couple of years write you up a note? There is no debt on the balance sheet for items that have not already been expensed. You are apparently confused on this issue. It's just a major warning sign that someone has lost confidence in someone else.. Nonsense. I've dealt with GMAC and other large financing organizations for years. They're no idiots; every damned thing they do is properly collateralized, and if it isn't then they will demand (and receive) subordination. Standard business practice. The XMSR financing arrangement was handled perfectly, GIVEN that they got caught in a jam when the stock price was low. Ideally, they would have issued enough stock when the price was in the 10s to handle the financing, but they could not have forecasted the drop in the markets that made the financing such a problem. Given the time when the financing was done, they handled it masterfully. GM is just making sure that if/when it goes reorg, that they are standing in line as a creditor Of course. You don't lend money to a business that has no credit, whose stock is at $3.18/share, whose debt is already junk, without getting security. Again, GM or anyone else would have been negligent to have done so. Literally, the Board would be liable for negligence. So GM doesn't really care if the common survives... Let's cut to the chase: Are you suggesting that XM is going to file Chapter 11? Because the chance of this happening is just about as close to zero as you can get. It simply isn't going to happen. So your point is really moot as to the security GM has. I'm not at all sure what you think should have been done. The original agreement called for XM to pay GM annually. XM said, hey, we need to reserve the cash for operations and GM said, "that's fine, but you have to pay us interest and collateralize the debt". Nobody, NOBODY, who understands the basics of finance would find anything strange about this arrangement. It is done every day, I've arranged hundreds of such deals for my clients in the past, but for smaller amounts.