By Relmor Demitrius
Sirius XM Radio (NASDAQ:SIRI) today announced that they have been awarded an exception request panel hearing on April 29th to make their case for continued listing on the Nasdaq Global Exchange. An independent panel will hear Sirius XM’s case and award Sirius XM the extra time they request. This is considered a simple formality at this time, as experts and Sirius XM themselves expect an approval to remain listed until September 13, 2010. This would be the extra 180 days to regain compliance on the minimum bid price rule on the NASDAQ exchange from the March 15th date. Mel Karmazin, CEO of Sirius XM, has stated that he feels they will be successful in their attempt. Sirius XM is one of the most heavily traded stocks on the entire Nasdaq trading platform and their market cap currently sits at a healthy 3.4 billion dollars.
The press release also states that Sirius XM expects to extend the companies agreement with stockholders on the reverse split option, which expires in June of this year. A simple revote on the issue during the May stockholder meeting will be a vitrual certainty of passing again. Liberty Media, through Liberty Capital (NASDAQ:LCAPA) owns 40% of Sirius XM, votes on all proxy’s as a 40% stockholder, and seem to be on the same page as Sirius XM on all corporate issues. Greg Maffei has stated that Liberty’s approach to Sirius XM’s management is “hands off” and we will let them “run their business”. These comments clearly indicate Mel is in charge, and if he wants a reverse split extension, he will get it. This is the only option that Mel would have left if the stock still didn’t trade over $1 by September 13th, 2010. At that time, the company would have no choice but the execute the reverse split, or be removed from the exchange. There is a possibility the NASDAQ minimum bid price rules might be changed to focus on the market cap of a company, and not the stock price. This would allow a permanent amount of time to regain $1.
With most analyst price targets well over $1, and simple EBITDA evaluations showing an extremely undervalued equity, Sirius XM could be trading over $1 in days, forget months. With rumors of strong March auto sales investors of Sirius XM might not have long to wait.
Long SIRI
SIRI was one of the best performing stocks in 2009 and will again be one of the best performing stocks of 2010, yes its very volatile but in the long run you will make lots of money, buy now while its still under $1 its very cheap.
Relmor,
Once again another great article with facts. Keep up the professionalism. I just added your web site to my home page. Hope it will attract more viewers to http://www.Kingofalltrades.com as the siri investors need to read your views on the Stock Market.
Again, Thank you
Richard Keane
http://www.SiriusNews.com
Hello. Fantastic job, if I wasn’t so busy with my school work I read your full site. Thanks!
Great summary of the situation Relmor…Nothing really new here, but so important to continually get this information out to the public so that they can have all the facts vs all the nonsense by the media bashers. No doubt in my mind the board will provide an extension and that the PPS will be in compliance of the minimum bid rule even before it becomes necessary to get further shareholder approval in May. Looking forward to the March auto sales
next Thursday, April 1st… Thanks again for getting this out in such a timely manner!
Rel, Think its important here to note with kudos to you and KOAT for providing the facts concerning the appeal process and timelines for months now long before any other boards that I read got it right and in fact were misleading in their reporting. Great job!
Agreed, Relmor – Excellent summary and I especially appreciate your comments regarding the Liberty relationship with Sirius XM. Far too often this relationship is misrepresented by those with an “agenda” as being somewhat hostile, harboring a desire to gain more “hands on” control. As Greg Maffei and John Malone have publicly stated, they are extremely pleased with the performance of Sirius XM and their modus operandi is to have current management run the company without interference.
Correct Boomer. This site has been 100 percent correct on this issue and timeline from day 1 back in Nov or Dec of 2009. No surprises here, exactly.
They can get another six months after September 13th, 2010, as per a separate panel. Please recall the new Nasdaq rules that went into effect in late January of this year. Essentially, they have until March 2011 before having to enact a reverse split.
@Ugly
Keep in mind, there were no rule changes that effected the appeals process for minimum bid requirements. The January changes changed the compliancy periods for different delinquencies — to match the periods already in place for minimum bid process.
The article about a change of up to “18 months” to become compliant by Satwaves, was wrong. The ability to get 18 months has been in place for a long time.
Regardless, it is not automatic… the hearing panel can only grant 180 days from March 15th… Sirius needs to take it to the Listing Panel after that, to get it stretched out to 360 days, which would take it to March 2011… and they don’t have to approve the deal. After that, Sirius would have to challenge it to the SEC, and then in Federal Court… if one or both of the panels deny their request. I’m not saying that would be the case, but that is the process. Nonetheless, the “up to 18 months” has been in place for a very long time. The Satwaves opinion of the January ruling was incorrect.
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In regards to Liberty’s voting power, their website says the following:
“Currently represents approximately 5% voting power. On the satisfaction of certain conditions, Liberty Media has the ability to convert the balance of its holding into a series of stock with full voting power. Upon such conversion, Liberty Media would have 40% voting power.”
http://www.libertymedia.com/capital-siriusxm.aspx
While the Liberty site may say that it is 5% voting power… according to the Sirius proxy — Liberty’s stake is considered to have 40% voting power.
In fact, all of the filings over the last year with regards to the preferred equity have stated that the preferred shares enjoyed full voting power, without conversion… they also qualify for full divdend (assuming conversion as well).
Liberty does not have to convert the preferred shares to vote or receive dividends.
“As of the Record Date, holders of our common stock and our Series A Convertible Preferred Stock held approximately 60% of the general voting power, and holders of our Series B-1 Preferred Stock held approximately 40% of the general voting power. General voting power refers to all securities entitled to vote at the annual meeting. With respect to an individual proposal, voting power refers to all securities entitled to vote on the proposal.”
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And for a further example of Liberty’s 40% voting power, see page 70 of the second quarter 10Q, which gives the breakdown of all of the votes from the 2009 annual meeting… in that, they note the full vote — as well as the impact that the “preferred shareholders” have on the vote.
One addendum though… the preferred shareholders cannot vote on the election of common stock directors — however can designate and elect up to 6 directors of their own, to sit on the board. To date, Liberty has designated and voted on 3 positions.
All other votes of the company, Liberty has 40% voting power.
Again, see page 70 of the Q2 10Q.
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Rel, thanks for getting the facts out and the likely outcome. I hope Mel pushes for NASDAQ to not simply looke at the sp, but rather other indicators to the value of the company. Sirius XM is not simply some penny stock, they have satellites in space after all.