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February 11,
2009
Sirius XM Prepares for
Possible Bankruptcy
Satellite radio company
Sirius XM Radio has hired advisers to prepare for a possible bankruptcy
filing as the company is buckling under $3.25 billion in debt,
the New York
Times reported today. Sirius XM owes about
$175 million in debt payments at the end of February that it is unlikely
to be able to pay. With over $5 billion in assets, it would be the
second-largest chapter 11 filing so far this year, according to Capital
IQ. Sirius XM’s problems could pave the way for a takeover by
EchoStar, the TV satellite company, which has bought up Sirius
XM’s debt. In addition to the $175 million due in February,
EchoStar also owns $400 million of Sirius XM’s debt due in
December.
href='http://www.nytimes.com/2009/02/11/technology/companies/11radio.html?ref=business&pagewanted=print'>Read
more.
House Panel to Examine
Lending by Banks Receiving TARP Funds
Bank executives including
J.P. Morgan Chase & Co. CEO Jamie Dimon, Bank of America Corp. CEO
Kenneth Lewis and Citigroup Inc. CEO Vikram Pandit are set to testify
before the House Financial Services Panel today that they are lending
despite economic headwinds, and are lending more because of the
government capital they have received, the Wall Street Journal reported
today. The hearing comes as politicians and the public have asserted
that the banks have cut back on lending despite receiving money under
the Troubled Asset Relief Program (TARP). The bankers acknowledge the
public anger in their remarks, and seek to portray their banks as using
TARP investments to blunt the recession's effects on Main
Street.
href='http://online.wsj.com/article/SB123435812693672823.html?mod=testMod'>Read
more. (Subscription required.)
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr021109.shtml'>Click
here to read the prepared testimony and watch today’s
House Financial Services Hearing at 10 a.m. ET titled “TARP
Accountability: Use of Federal Assistance by the First TARP
Recipients.”
Some Banks Want to Return
Government Money
Even before the
government announced its latest efforts to fix the troubled banking
industry on Tuesday, executives at Goldman Sachs and Morgan Stanley said
they wanted to repay the money quickly, the New York Times reported today.
Both banks received $10 billion under the first rescue plan last fall.
Paying back all those funds would be difficult in this tough economic
environment, but banking executives worry that the government may
intrude further into their businesses as long as they are beholden to
Washington. “We just think that operating our business without the
government capital would be an easier thing to do,” said Goldman
Sachs CFO David A. Viniar. “We’d be under less scrutiny, and
href='http://www.nytimes.com/2009/02/11/business/economy/11wall.html?ref=business&pagewanted=print'>Read
more.
Government Looks to
Distressed Debt Investors to Buy Bad Assets
With its plan to shore up
banks that was announced yesterday, the Obama administration hopes to
entice distressed debt investors to buy troubled assets from the
nation’s banks and enable them to make the loans needed to
jump-start the economy, the
size='3'>New York Times reported today. In
recent weeks, several prominent hedge fund managers met with Lawrence H.
Summers, the head of the National Economic Council, to discuss their
interest in the planned public-private partnership. Some worried that
their own investors, which include large public pension funds, might
view the potential investments as too risky. Other distressed debt
investors would not be allowed to buy such assets under their own
investment guidelines.
href='http://www.nytimes.com/2009/02/11/business/economy/11react.html?_r=1&ref=business&pagewanted=print'>Read
more.
Senate, House Begin
Negotiations on Stimulus
Senators began talks with
the House yesterday to determine which tax breaks and spending
provisions will survive as part of a final stimulus package, the
Washington Post
reported today. Senate Democrats won passage of their
version of the legislation yesterday by a vote of 61-37. Democrats in
the House and Senate remain broadly unified around the central
provisions of the legislation, which is intended to create or save up to
4 million jobs, but several disputes could extend negotiations beyond
their goal of having a finished product by the weekend. The Senate's
package is about $19 billion more than the $819 billion House package
and provides less in federal spending and more in tax breaks.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/10/AR2009021001397_pf.html'>Read
more.
Elevator-Music Creator Files
for Bankruptcy
Muzak Holdings LLC, the
company that made “elevator music” famous, sought bankruptcy
protection from creditors to restructure its debt, Bloomberg News
reported.The Fort Mill, S.C.- based company listed debt of as much as
$500 million and assets of less than $50,000 in chapter 11 documents
filed yesterday in U.S. Bankruptcy Court in Wilmington, Del. Fourteen
affiliates also filed. A unit, Muzak LLC, said that it has assets of as
much as $500 million.The case is
size='3'>In re Muzak Holdings LLC, 09-10422,
U.S. Bankruptcy Court, District of Delaware (Wilmington).
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=aVyRjmsSGBNc#'>Read
more.
Circuit City Seeks
Incentives for Wind-Down
Circuit City Stores Inc. is
asking a bankruptcy court judge to allow it to give incentives to
executives and other workers to stay with the company during the
wind-down process, according to court filings, the Associated Press
reported yesterday. Going-out-of-business sales should last through
March, after which the stores will be closed. A small staff will keep
working at the corporate office through the process. Under the company's
proposal, 16 executives would split up to $2.3 million if they achieve
specific target tasks such as staying within the wind-down budget and
obtaining the sale of Circuit City's Canadian and Internet assets. The
remaining non-managerial workers would share no more than $1.62
million.
href='http://news.yahoo.com/s/ap/20090210/ap_on_bi_ge/circuit_city_bankruptcy_2/print'>Read
more.
Cable Firm Charter Teeters
Toward Chapter 11
With a Sunday deadline looming,
the cable operator Charter Communications has been silent on whether its
talks with debtholders would be able to keep the company from filing for
chapter 11, Reuters reported today. Financial analysts see the cable
company filing for bankruptcy soon. Charter has refinanced and extended
its maturities every year since 2004. Just before the end of last year,
Charter said that it asked longtime financial adviser Lazard to start
talks with bondholders to boost its financial flexibility. Last month
two Charter subsidiaries did not make scheduled interest payments worth
$73.7 million on some of its debt. The firm has the right to make the
interest payments within a grace period that runs through Sunday. If it
doesn't make them by then, it will be considered to have defaulted on
its obligations. The St. Louis-based firm has long been the most
indebted major cable firm, with net debt of slightly more than $21
billion as of September 30.
href='http://uk.reuters.com/article/autoNews/idUKTRE51A08I20090211'>Read
more.
Lyondell Wins Temporary
Restraining Order Against Creditors, Noteholders
Bankruptcy Judge
Robert E. Gerber
on Friday issued a temporary restraining order preventing
creditors from taking action against Lyondell Chemical Co. while its
U.S. operations reorganize in chapter 11, Bankruptcy Law360 reported
yesterday. The order also prevents hundreds of noteholders of
approximately $615 million of debt related to 8.375 percent senior notes
due 2015 from taking action against the company, including moving to
accelerate the maturity of such notes. A hearing on a preliminary
injunction related to the restraining order is scheduled for Feb.
13. Read
more. (Subscription required.)
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