both of these companies took on large amount of debt, so the debt is a concern. the interest they had to pay was high during the times when credit was much easier to get....
they have at least 750 million in XM debt coming due this year,
most of this debt will be paid by debt, they have approval to issue 3.5 billion shares, this would dillute existing shareholders. they would probably issued the stock and do a revese split or do it before to drive the stock price... ie. reveres split 1-10 1-50- 1-100 the 1-50 1-100 or higher seems more likely.
the best at this stage a long term shareholder could hope for is that the share price goes up and they are not as dilluted, however it look like they will be.....or lose all of their equity.
have read a few articles that the common shareholders will not be wiped out....not sure though if I am a bond holder why would I want to share ownership of the company if they fail on their debt.
never bought the stock, though it had some good runs, debt was high and did not like it when the two would pay large amounts for content.....
might get sat radio, however will wait to see the merger done, also in Canada there are still two owned by different groups.....may have to buy mine in the US....have no idea why it is cheaper in the US with better options....
at this stage a pure .15 gamble,
most companies that do revesrse splits lose money for their shareholders, however there are a FEW exceptions.
thanks
selkirk
