Sirius XM could be Done (SIRI)

Sirius XM Satellite Radio (NASDAQ:SIRI) has been working with advisers to prepare for a possible bankruptcy filing, in a move that could put pressure on the satellite company EchoStar (NASDAQ:DISH), which owns a substantial amount of the company’s debt.

Sirius has been working with the restructuring expert Joseph A. Bondi of Alvarez & Marsal and the bankruptcy lawyer Mark Thompson of Simpson, Thatcher & Bartlett to help prepare a Chapter 11 filing, people close to the company said. Sirius, whose radio stars include the popular shock jock Howard Stern, has also been working with the investment bank Evercore Partners.

Charles Ergen, who controls a satellite-television empire including the Dish Network Corporation and EchoStar, recently acquired the majority of a $300 million tranche of Sirius debt that matures next Tuesday. Since the news about the debt purchase emerged, questions have surfaced over whether Mr. Ergen will make a bid to purchase Sirius. The threat of a possible bankruptcy filing could force Mr. Ergen to make a formal offer for the company now if he doesn’t want to go through an auction in bankruptcy court.  Since the merger with XM radio, the combined entiuty is the sole provider of satellite radio in the United States.

Today Sirius XM shares closed at 11 Cents USD but after-hours the stock fell 35% and at 6:27 PM EST finished at 7 Cents a share.  Tomorrow's activity will most likely bring more pain for Sirius shareholders, that makes a one year decline of -96%.