EchoStar mogul Charlie Ergen has made another play for Sirius XM (SIRI), offering to restructure its debt and refinance it in exchange for control of the company. No word yet from Mel Karmazin, who was last seen banging the drum and saying Sirius would be able to refinance its debt no problem.
Charlie’s clever offer is not an acquisition offer, but it might preserve some value for Sirius’s walloped shareholders. So Mel may be forced to play ball.
WSJ: Sirius rejected Mr. Ergen’s offer late last year, but it remains on the table. While the two sides are still in discussions, the satellite-radio operator has given no indication that it is prepared to accept the deal, the people said.
Yet Sirius may have no other option. If it can’t raise about $175 million by Feb. 17 to repay bonds held by EchoStar Corp., a satellite-technology company controlled by Mr. Ergen, Sirius will likely be forced into bankruptcy, people familiar with the matter say. In addition to the February bonds, EchoStar controls a $400 million tranche of Sirius debt that expires in December.
The standoff has turned into a test of wills between Mr. Ergen and Sirius XM Chief Executive Mel Karmazin. Both men are television-industry veterans and have often found themselves on opposite ends of the negotiating table.
A bankruptcy filing would wipe out Sirius’s shareholders. Sirius’s management and board would likely expose themselves to litigation if they filed for bankruptcy in the face of an offer that would preserve at least some of investors’ equity in the company.