SIRI, Sirius XM Satellite Radio:
Reports and speculation regarding a SIRIus partnership between the debt-laden satellite radio company and either EchoStar or Liberty Media have been prevalent over the past week with a huge chunk of Sirius debt coming due on Tuesday.
In December of last year EchoStar, headed by Charles Ergen, was rebuffed in their takeover bid of Sirius XM by Mel Karmazin. Helping this story to play out like a soap opera, Mel Karmazin, CEO of the combined Sirius XM company, and Ergen have a years long feud dating back to Karmizin's days at Viacom.
Liberty Media got involved late and, according to reports, may be willing to offer Sirius XM a bridge loan to take care of the February debt that Sirius has coming due.
Another option for the company is to file Chapter 11 Bankruptcy, an option that Mel Karmazin has indicated that he would support rather than give in to the demands of Charles Ergen, who has been buying the Sirius XM debt. Creditors have threatened to remove Karmizin from his post if he chooses bankruptcy over a deal more beneficial to the company.
If you can't keep up, don't worry, very few can. The last week has seen speculation run rampant about the future of the company and the reports have played havoc on the stock price as investors speculate the outcome.
Last week gave investors the opportunity to turn a quick double if they weren't afraid of buying in at around five cents after reports of looming bankruptcy surfaced. The stock closed the week at just over ten cents.
Tuesday morning should bring some closure to the weeks-long drama because that is when much of this February debt comes due.
It is my opinion that the company will accept one of the deals that may be on the table with either EchoStar or Liberty and it will be announced Tuesday AM. Karmazin had earlier managed to restructure the large chunk of debt due in December of this year, giving me the indication that he has all along intended to accept a deal rather than file for Chapter 11.
SIRI is a high risk stock, as it has been for a while as most early investors have lost nearly 100% of their investment over the past couple of years.
On the other hand, those that have averaged down or bought a new position in the stock at these depressed levels could be greatly rewarded as this soap opera continues to play out.
I, for one, have taken the opportunity to buy the stock at these levels because the possible rewards outweigh the risk, in my opinion.
I'll be watching the SIRI stock this week and it should continue to be a day trader's dream.
