King of All Trades Staff -

Sirius XM Radio(NASDAQ:SIRI) has received two S & P corporate credit ratings upgrades this year. In April S & P took their corporate credit rating  from CCC to CCC+, and another one in August to a B- rating.  Perception of a company’s debt load and its ability to repay that debt is vital to a company’s ability to obtain new money for refinancing existing debt for better terms, or to obtain new debt altogether.

Now this month JP Morgan (NYSE:JPM) has initiated coverage of  Sirius XM’s credit.  They have begun coverage with an over-weight rating.  Sirius XM Radio has confirmed this coverage.

This rating typically indicates the company’s debt is a reliable long term investment at this point in time.  As equities are bought and sold, so are a company’s bond issues.  It appears now that JP Morgan will cover both Sirius XM’s equity, which they have given a Neutral Rating, and now their debt as well.  JP Morgan re-initiated coverage of Sirius XM’s equity in May of 2009.

Being bullish on a company’s debt is encouraging, as the company may seek to further refinance existing debt, especially the 550 million in bonds sold in July of 2008, to facilitate the merger of the two companies, Sirius Satellite Radio, and XM Satellite Radio.  These bonds were considered “ugly financing” by investors due to the company giving lent shares along with the bonds so they could be properly hedged.  If this debt were to be refinanced with new money, the rate might come down (7%), and the lent shares (202 million against the current float) would be returned and destroyed by the company.  These shares have never counted when calculating earnings per share, but are still involved in the float.  In the Q3 quarterly report Sirius XM reported 60 million of these lent shares were returned and destroyed by the company.

Another bond issue Sirius XM might target is the other bond issue needed to facilitate the merger in July of 2008.  These 13% 770 million notes due in 2013 carry a higher interest rate, and are due sooner.  Either way, both have reasons to be targeted first, depending on managements corporate strategy.

Sirius XM was able to refinance most of its 2009 outstanding debt due to Liberty Media’s loan in February of this year.  Sirius XM’s 40% equity stake awarded to Liberty for this assistance is trading in Liberty Media’s holding company, Liberty Media Corporation Capital (NASDAQ:LCAPA).  Other tracking companies of Liberty Media include Liberty Media Corporation – Interactive (NASDAQ:LINTA), (NASDAQ:LINTB), Liberty Media Corporation – Starz, (NASDAQ:LSTZA), (NASDAQ:LSTZB), and Liberty Media Corporation Capital (NASDAQ:LCAPA), (NASDAQ:LCAPB).  Liberty also owns the controlling interest in Worldspace, Inc. (OTC:WRSPQ).

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By Steve Garcia

Greg Maffei said Thursday that Sirius XM may eventually be spun off. This has led to much speculation. One needs only to look at Liberty’s history and recent events regarding Liberty and Direct TV (DTV) in which Direct TV was joined with the broadcasting and programming assets of Liberty Media’s Liberty Entertainment unit and spun off. The move combines the home satellite TV provider with Liberty’s programming units, including Liberty Sports, the Game Show Network and Fun Technologies. Through the spin off, the new entity will assume $2 billion of Liberty’s debt and $30 million in cash. DirecTV will also make $650 million in Liberty loan payments.

“This transaction clarifies DirecTV’s capital structure, reduces its shares outstanding, eliminates stock overhang and arbitrage issues, and provides DirecTV with strategic content businesses,” said Greg Maffei, Liberty president and CEO. “And this transaction offers value to Liberty’s shareholders by eliminating the discount in our tracking stock structure and allowing them to continue to participate directly in the strong performance of DirecTV.” (more…)

By Relmor Demitrius

On September 15th, 2009, Greg Maffei of Liberty Media Corporation presented at the Goldman Sachs Communacopia in New York. Not much fanfare came from this presentation from Maffei for Sirius XM Radio (SIRI) investors, but maybe that was an oversight. Lost in the more seemingly important Liberty Investors Conference this month, and Sirius XM Radio’s own conference call coming very shortly, one might have missed some interesting and fascinating comments from one of the more powerful and important influences on Sirius XM, Greg Maffei. In case anyone is wondering who Greg Maffei is, a quick look into his past accomplishments and credentials is in order before going forward.

Greg Maffei is currently the President and CEO of all three Liberty Holding Companies, Liberty Capital (LCAPB), Liberty Entertainment (LMDIA), and Liberty Interactive (LINTA).

Liberty Capital includes Liberty’s holdings in Sirius XM Radio (SIRI), Viacom (VIA), Time/Warner (TWX), and Sprint Nextel (S).

Liberty Entertainment is where DIRECTV is held.

Liberty Interactive is where they hold QVC and a lot of their internet companies.

Greg Maffei discussed all of Liberty’s divisions during his presentation, but the commonality in all of Liberty’s interests is Greg Maffei himself and his background is truly impressive.

Maffei is currently on boards with Electronic Arts, DIRECTV, and Sirius XM Radio.  He has held the  position of Chief Finance Officer at Oracle, Chairman and CEO of 360 Networks, and a CFO of Microsoft as well. His resume is extensive, having been involved with many industry leaders in the past. This man has attached (more…)