Sirius says reports of its financial troubles are not really false, but not true either:
- Recent news articles, fueled by a misleading report from Reuters, claim that Sirius Satellite Radio (NASDAQ: SIRI) could be forced to seek bankruptcy protection if it could not raise new funds by the second quarter of 2003.
This statement was taken from a Securities and Exchange Commission (SEC)
filing that speculated what Sirius may do if its fund raising efforts were to fail, and is routine reporting language about what any company could be forced to do if it were unable to secure additional funds for operation.
“We have a tremendous amount of momentum in the marketplace. All of our
radio, retailer and automobile manufacturing partners are very excited about
our product and the wonderful acceptance it has received by consumers,” said
Joseph P. Clayton, President and CEO of Sirius. “We are making significant
progress in solidifying our balance sheet, and I remain extremely confident
that we will secure additional financing shortly.”
The Quarterly Report Form 10-Q filed with the SEC contained similar language
Sirius has used in other SEC filings in the past to explain what could happen under certain circumstances.
The Reuters story, and its provocative headline, gave the impression that there was a new and troubling development that had not been previously discussed. This is blatantly false. Sirius has previously disclosed what its cash reserves were, and that it would require additional funding.
Also, according to conversations between Sirius and Reuters management, the
news service claimed that their decision to print the misleading story was
based on their assertion that Sirius had never used the word “bankruptcy” in
previous filings, and this constituted new information. This too is blatantly false. Sirius has used this routine cautionary term in previous filings, such as in its Annual Report Form 10-K.
In a conference call with analysts and investors on Tuesday, August 13, Sirius – once again – indicated its funding requirements and also stated that it was seeking additional financing from existing partners, bondholders and other stakeholders. This is not unusual in any way for a company launching a new product in a new industry.
“We are in continuous discussions with our financial sponsors and all of our key debt holders,” said John Scelfo, Executive Vice President and CFO of Sirius. “While an agreement has not yet been reached, all of the parties are working toward the announcement of a transaction that will put our finances in top shape.”
Sirius also disclosed that it had approximately $300 million cash on hand, enough to fund activities into the second quarter of 2003, and was looking
for ways to extend those cash reserves further into the year through various
cost cutting measures.
From its three satellites orbiting directly over the U.S., Sirius broadcasts 100 channels of digital quality radio throughout the continental United States for a monthly subscription fee of $12.95. Sirius delivers 60 original channels of completely commercial-free music in virtually every genre, and 40 world-class sports, news and entertainment channels. DaimlerChrysler has announced plans to offer Sirius radios in 17 models of Chrysler, Dodge and Jeep vehicles beginning this fall. BMW has announced plans to offer Sirius radios as an accessory in its most popular models through BMW Centers across the country, including select BMW 3 Series, 5 Series and X5 vehicles. Nissan has announced plans to offer Sirius radios as an option this fall on six Infiniti and Nissan 2003 models, and future Audi and Volkswagen models will also offer Sirius. Sirius also has agreements to install AM/FM/SAT radios in Ford, Mercedes-Benz, Jaguar, Volvo and Mazda vehicles. Kenwood, Clarion, Audiovox, and Jensen satellite receivers, including models that can adapt any car stereo to receive Sirius, are available at retailers such as Circuit City, Best Buy, Sears, Good Guys, Tweeter, Ultimate Electronics and Crutchfield. Panasonic satellite radio products will be available in September 2002.
So, you know, yeah we may declare bankrupcy and we need shitloads more cash to not collapse in a pile of very expensive rubble, but it’s not like that’s news or anything. Right?