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(08/14/02) Sirius Warns Of Bankruptcy
Reuters reported yesterday that Sirius Satellite Radio warned that it may have to seek bankruptcy protection if it cannot raise new funds, sending its shares spiraling down by more than a third to a record low.
In a filing with the SEC, Sirius said it needed as much as $600 million to continue operations. It said it had hired financial advisers for help on ways to obtain new funds, including a possible debt-for-equity swap that would dilute current shareholder stakes.
Sirius also reported a wider second quarter net loss of $124.6 million, or $1.62 a share, compared to a net loss of $72.5 million, or $1.35 per share, last year.
In the SEC filing, the broadcaster said it has hired UBS Warburg to advise it on a range of financial options. The company also formed a special committee of independent members of its board of directors to look at its options. That committee has, in turn, hired an investment adviser to pursue "a substantial additional investment" in its stock from affiliates of Apollo Management and the Blackstone Group.
"If we fail to timely raise additional funds, we will be forced to seek protection under the United States bankruptcy code, materially reduce our operations, significantly alter our business plan and/or seek the sale of our company," Sirius said in the filing.
Sirius shares closed down 35 percent, or 72 cents, at $1.35 on Nasdaq.
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