February 17, 2009
Sirius XM creditors draw line in sand
Sirius XM Radio creditors said they preferred the U.S. satellite radio company make a deal to avoid bankruptcy, in spite of the company's $175 million debt.
From our perspective, there are restructuring alternatives that are preferable to bankruptcy, said Edward Weisfelner at bankruptcy firm Brown Rudnick.
Weisfelner said creditors would move to replace executives, including Sirius XM Chief Executive Officer Mel Karmazin, or appoint their own trustees if the company filed for Chapter 11 protection, The Washington Post reported Tuesday.
The Post reported that Liberty Media was close to a deal that would enable Sirius to avoid bankruptcy. Dish Network CEO Charles Ergen is also keeping an eye on developments, the Post said.
Sirius merged with XM in July but the company has never made a profit. Its share values fell to 10 cents a share Friday, down from $3 a share last year.
Its financial burdens include lucrative salaries for big-name personalities, like Howard Stern, who earns $100 million a year. In addition, it pays large fees to automobile makers for installing satellite radio equipment into new cars.
Bankruptcy would allow the company to renegotiate these deals, the Post said.