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Getting Sirius About Convertibles


What happens if a company goes bankrupt or gets sold.

I've long been a fan of satellite radio. Since the duopoly merged into a monopoly, I've enjoyed the greater selection as some Sirius (SIRI) stations have been made available to original XM subscribers like me.

In particular, I'm becoming a late-in-life Deadhead, after a fashion. For the last couple of weeks, I almost always stay tuned to the all-Dead-all-the-time station. Now I understand what the big deal was all about. I know that probably sounds strange for someone who grew up in the Bay Area and went to high school just a few blocks from Berkeley's Keystone club, where Jerry Garcia was a fixture.

Anyway, this is a financial infotainment site, so let me get to the financial part. I own a very small amount of Sirius XM's convertible bonds, set to mature in December. I originally bought the bonds at $0.90 on the dollar, sold them a bit higher when I started to get nervous about the company's survival last year, then decided to jump back a few months ago after they had plunged to 50. Essentially, as a gambler, I was getting even money on the proposition that the company would last another year.

As usual, I was early. Prospects have certainly not improved for the company's ability to refinance the bonds, and they are now in the high 30s. The company has been chipping away at a more pressing concern -- another bond issue maturing in several weeks -- by getting some of the bondholders to turn in their bonds in exchange for big slugs of new stock. You can buy a share of stock for about what it costs to park for 15 minutes downtown in my quiet Westchester village.

Anyway, I just got an email advising me that my subscription is coming due for renewal. I first subscribed 4 years ago, getting a 5-year deal that I've thoroughly enjoyed despite some recent blips in signal accessibility. But here's my question - and I ask it because I think there are broader implications for how Minyans and non-Minyans alike need to go about business in today's world. If I renew now for multiple years, am I not doubling down on my bonds but with much worse odds?

If the company goes bankrupt, will it end up being sold to a buyer that cuts rates even further? Plus, will I have to worry about the hassle of possibly getting charged every month on my credit card for something I'm not getting, if the service ends, and trying to get through to customer service when there may not be anyone there to answer the phone?

Or should I stop whining and just sign up for more and hope for the best?
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Position in SIRI

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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