In the weeks since the final bankruptcy sale and approval of Worldspace assets to Noah Samara; this time through Yazmi LLC, one thing is abundantly clear. The plight of all the assets of Worldspace and SATCO is as yet unknown and still awaiting a final outcome. Court documents prior to final sale stated that the consideration to be received from Yazmi in the sale purchase agreement would not be sufficient to pay Liberty Satellite Radio and Liberty Satellite Radio Holdings in full. The Debtors estimated that Liberty’s aggregate secured claims were in excess of $116 million dollars. Under the settlement agreement, the Debtors were released from such claims and the corresponding liens, allowing the Debtors to distribute the proceeds of the sale to other creditors. In exchange for that, the Debtors and the other Parties to the settlement agreement provided releases to Liberty, and Liberty received other consideration. That “other consideration” was Liberty obtaining a return of $370,000 in funds which the debtors transferred to Liberty; that Liberty had loaned to support the WorldSpace Italia subsidiary. When Liberty decided not to pursue a Liberty purchase agreement, the need for those funds evaporated. Liberty also received $250,000 of the Yazmi sale proceeds, which was 5% of the total and significantly less than Liberty would have gotten if its senior secured claims were still in effect. The Debtors believe that the note from WorldSpace Italia that Liberty received is of little value; the Debtors also believe WorldSpace Italia cannot repay that note, and the Debtors themselves have limited resources with which to possibly pursue collection. The Debtors were willing to relinquish their right to abandon their responsibilities and their assets to Liberty in exchange for Liberty’s relinquishment of much of its claim. Why was Liberty so willing on paper, to abandon its senior claimholder status?
Liberty also wound up after closing of the Bankruptcy sale deal with a lien of $5.5 million dollars; which just happens to match the very amount Noah Samara paid for the Worldspace assets thru Yazmi LLC. Liberty, along with all the other parties involved, is barred from suing Samara’s new business Yazmi LLC. as part of the Bankruptcy sale agreement. Another interesting couple of points are; the fact that for the Bankruptcy sale to close, SATCO had to file for chapter 11 Bankruptcy; and the fact that there were no provision in the sale agreement for the sale or handover of the ground spare and or unfinished satellite which are both in storage.
Worldspace Bankruptcy sale order:
http://www.kccllc.net/documents/0812412/0812412100602000000000006.pdf
Yazmi received the orbiting Afristar and Asiastar assets which were transferred with final approval on July 29th 2010 from Afrispace Incorporated. As of today, there are no other filings regarding the former Worldspace satellites from Yazmi LLC
It appears that the final dissolution of Worldspace and all its intertwined assets is nearer, but still under a cloud of mystery and disinformation. The bankruptcy process has been streamlined a bit more so as to not convolute the situation, but final disposition of all assets seems to be in a state of flux. Speculatively, there seems to be a back room situation with regard to Liberty and Yazmi. How else to explain the lien for 5.5 million which Liberty now holds from the bankruptcy sale; which again, is the same exact figure that Noah Samara paid for the Worldspace assets in the bankruptcy sale? Why would Liberty take such a small sum and step aside when they were the major DIP lien holder? Why would they agree to take the Worldspace Italia debt, uncollectible debt according to documents, as part of their settlement agreement?
As I continue to investigate the situation, and review documentation, it seems quite possible that some assets which Worldspace had are in Liberty’s sights. However, in the multi-corporation tree that was Worldspace, streamlining of the ownership of those assets must take place before Liberty can have a solid and real chance at unencumbered ownership of whatever it is they see as valuable to them. Once again, we know that Liberty has a large presence in Europe through Liberty Global. Liberty Global’s European operations are conducted through Liberty Global Europe, which provides video, broadband internet, and voice services in 11 European countries under the brands UPC, Unitymedia (Germany), Cablecom (Switzerland) and Telenet (Belgium), and digital programming & services through Chellomedia, a world class multimedia content provider.
Liberty Global’s European headquarters is located in Amsterdam and home to their technological development, network management, and product development teams. It is also the location of Liberty Global’s European distribution center, the Digital Media Centre (DMC). The DMC is the source of digital television for millions of households in Europe, in and outside of Liberty Global’s footprint. In each of Liberty Global’s European markets, local affiliate operations benefit from the company’s global scale and centralized technology procurement, combined with its commitment to locally managed culture and content environments. Looking at this last sentence again, one could see where Sirius XM Radio (NASDAQ:SIRI) and Liberty Media might possibly benefit down the road should expansion into Europe be in the cards, or even to South America, as Liberty Global also has a presence there. One indisputable fact remains that Worldspace had licensing for L-band spectrum in Italy and Germany, those licenses are most likely the real source of Liberty’s interest. Another interesting thing, and one which I feel is a part of the big picture is Liberty Global’s recent news announcing development of a home media gateway, as seen here:
Liberty Global partners up for IP multimedia home gateway
Liberty Global has announced plans to work with Samsung, Intel Corporation, NDS and Nagravision to build a new common IP gateway device for its European digital TV customers. The multimedia home gateway will be an all-IP platform capable of distributing video, voice and data content throughout the home and to multiple video displays. The user interface will seamlessly integrate video content, widgets, apps, and an advanced search and recommendation engine.
Samsung will build the multimedia home gateway, which will be powered by the Intel Atom CE Media Processor. The middleware and the user experience will be provided by NDS, based on Flash Technology. Nagravision will provide the conditional access solution through NAGRA Media Access. This solution will support MoCA and WiFi, and participate in the Digital Living Network Alliance (DLNA) ecosystem.
Based solely on this information as anyone can see, the true potential for Sirius XM and Liberty has barely even begun to be explored. There is much more going on behind closed doors than most of us are ever privy to. With that in mind, and with Sirius XM’s recent quarters of solid improvement, the future of the company truly has never been so bright. There is obviously still much to be done within the company, and much to be seen as things continue to sort themselves out, but those who bet on the demise of Sirius XM have surely lost to this point because the company is clearly focused on mitigation of the issues it had with respect to infrastructure and exorbitant costs of maintaining that infrastructure. As satellite technology and capacity continues to evolve, the benefits to Sirius XM will clearly be evident. The launch of Sirius FM-6 satellite will begin to bear fruit with regard to infrastructure cost reductions as synergies start to be gained and realized from Geostationary Orbit Satellites (GSOs) on the Sirius side join the already GSO satellites from the XM side of the company. The movement from Non geo stationary infrastructure will mean a significantly smaller footprint (less satellites in the air, which translates to less costs and CAPEX) going forward and required for the future infrastructure. The teaser given last Sirius XM conference call regarding the SIRI 2.0 roll out is only a small glimpse into what the future holds. A further enhanced internet presence would seem to be in the cards for Sirius XM as well. Sirius XM made a very conscious decision and made it an important part of its business plan when they created cell phone applications for the internet version of the service on every major cell phone platform. The company now needs to be working towards improving the internet capabilities (more available channels) of the service as well as working toward the release of SXM 2.0. This will help solidify the companys’ position as the premier satellite and internet music and entertainment provider in the world.
Disclosure: Long SIRI
Steve… just a thought, no guarantee here… but keep an eye on who gets the Worldspace patents. Recall, the XM terrestrial system is built upon patents developed by Worldspace over 10 years ago. XM had been making royalty payments to Worldspace for years — however when XM “bought in” to the Worldspace IPO several years ago, the XM royalty was restructured, as I understand things.
Also keep in mind that Sirius is moving to a geosynchronous satellite orbit… matching XM’s. They are not replacing the HEO satellites that Sirius now uses — but rather, going with the 2 satellite GSO constellation like XM does. Which will require Sirius to use more terrestrial repeaters (like XM does). The good news is that repeaters can be expanded — fairly cheaply. Technology-wise, the repeaters can be expanded to cover both sets of frequencies.
I don’t know where the Worldspace patents come in to play offhand — but whether Sirius will have to pay a royalty too, or not… is another possibility of what Liberty may be after. Owning the right patents could be a goldmine. Especially the terrestrial nature of the Worldspace patents…
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FWIW, looking over the YAZMI USA LLC purchase agreement… I noted that all of the XM agreements with Worldspace have been terminated… which means new ones would have to be negotiated for the XM use of the technology. Imagine how expensive that could get…
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(c) Modifications to Material Agreements
Termination of the following agreements with XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. pursuant to the Payment, Termination and Release Agreement dated June 10, 2009:
· Satellite Radio Cooperation Agreement effective July 18, 2005;
· Registration Rights Agreement dated July 18, 2005;
· Common Stock Purchase Warrant dated July 18, 2005;
· WorldSpace Implementing Memorandum dated September 30, 2001, as amended; and
· Letter Agreement dated May 19, 1998 regarding CD Radio Patents.
(q) Waivers/Releases
Pursuant to a Payment, Termination and Release Agreement dated June 10, 2009, WorldSpace Systems Corporation and WorldSpace, Inc. agreed to release all claims against XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. arising from any omissions, acts or facts that occurred up to and including June 10, 2009, pursuant to the following agreements:
· Satellite Radio Cooperation Agreement effective July 18, 2005;
· Registration Rights Agreement dated July 18, 2005;
· Common Stock Purchase Warrant dated July 18, 2005;
· WorldSpace Implementing Memorandum dated September 30, 2001, as amended;
· Letter Agreement dated May 19, 1998 regarding CD Radio Patents; and
· Technology Licensing Agreement effective January 1, 1998, as amended.
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Hey Homer,
Wonderful info you provided here. Great to share with others, and many thanks. I already read all this…but I had quite a long article already as you see. Didin’t want to clog things up, and I think you placing it in commentary on the article is amazing! I happen to mostly agree with you…though I also believe Liberty wants the German and Italian spectrum licensing. There is lots of disposable income in those countries and they have presence in Germany with Liberty Global Europe already. Also , Italy is a target for Liberty with QVC and HSN…so I think there is some leveraging and synergistic possibilities being pursued as we write all this.
Thanks for trying to clear the fog. Is the court case over? Last I read Worldspace had to get approval to deorbit the two satellites.
Uh, does anyone know about that world monopoly and sekret settellites that orlik keeps hinting about?
Steve, thank you for keeping this “behind the scenes” topic specific to sats/licenses active – I’ve been living on planes the past 3 weeks and trying to catch up. Homer, excellent points as well. Anyway, when you get a chance look at my post on the Sat Tech Forum dated June 21st at 8:10 am … I do not see any more “post numbers” to reference … where I highlight the date of Sept 30, 2010 as deadline for consummation of deal or company in Sterling VA comes into play. Any thoughts if this might also kick in? Hopefully not a dumb question, I’ve just been out of touch.
Great stuff guys!!!!