UPDATE 1-Sirius holders OK stock issue, reverse split
Thu Dec 18, 2008 2:37pm EST Email | Print | Share| Reprints | Single Page[-] Text [+]
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NEW YORK, Dec 18 (Reuters) - Sirius XM Radio (SIRI.O) shareholders approved proposals to issue up to 3.5 billion more shares and enact a reverse stock split, in an effort to pay down debt and shore up the satellite radio company's battered stock price.
Sirius XM shareholders, who have watched the shares crumble to 13 cents a share amid concerns about its subscriber growth potential and its ability to repay debt, gave the board the right to split its common shares by a ratio of between 1-for-10 to 1-for-50 by Dec. 31, 2009.
The stock rose about 7 percent on Thursday, to 13.8 cents a share. The shares have traded below $1 since Sept. 19, making Sirius one of many large companies whose shares languish below $1 amid the recession. Nasdaq has temporarily set aside a rule that would have threatened companies like Sirius with delisting for its low stock price.
At a meeting in New York, shareholders gave the company the right to increase the number of authorized shares of common stock to 8 billion from 4.5 billion.
Sirius has about $1 billion in debt due to mature in 2009, with the first portion due in February, and may sell stock to pay the obligation if it is unable to refinance.
The reverse split plan could shrink the number of outstanding shares to a range of 65 million to 320 million shares from the current 3.2 billion shares.
Despite its near term debt concerns, and worries that the automobile industries woes will hurt Sirius's growth plans, Chief Executive Mel Karmazin earlier this month said the company sees double-digit revenue growth in the fourth quarter and is confident the company can refinance debt due in 2009.
Earlier this month he told the Reuters Media Summit: "The merger (with XM Satellite Radio) has made us control our costs (and) we are dealing with going to significant profitability in the years ahead,
"Is everything rosy? Of course not. But what's going on is not operationally problematic."
In a presentation to shareholders, the company said it now expects to post a loss of $200 million this year in earnings before interest, taxes, depreciation and non-cash stock compensation expenses, otherwise known as adjusted EBITDA. It had previously expected a loss of $300 million.
(Reporting by Franklin Paul; Editing by Derek Caney, Dave Zimmerman)
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