It’s avoided insolvency so far, but are GM’s sales expectations realistic sufficiency to bring the struggling automaker back to profitability?

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GM Chairman Rick Wagoner discusses his plan to sustain GM viable during an unprecedented implosion in the U.S. home auto industry on Feb. 17, 2009 in Detroit, Michigan. Bill Pugliano/Getty Images

By David Welch and David Kiley

As promised, General Motors (GM) and Chrysler delivered their turnaround plans to the Treasury Dept. on Tuesday, Feb. 17. While both companies have slit costs, both saw they need more control cash and concessions from the union or their creditors to survive the downturn.

GM got another $4 billion from Treasury adhering Tuesday, completing a government commitment made in December to give the automaker $13.4 billion. But GM says that given the weaker economy and declining auto market, the company still could need since much for the reason that $30 billion in total. Chrysler has asked for $5 billion on top of the $4 billion it has borrowed from the government.

It will be up to Treasury to decide if the couple companies’ plans go far enough to prove that they are viable and will be able to make compensation the money back. There is risk that GM be able to’cheek by jowl get all of the concessions it indispensably and that sales won’t rebound fast enough to build income. In GM’s case, the company still has to convince its bondholders and the United Auto Workers to reduce coming debts. The car market will in addition need to revive in the nearest couple of years to the levels that both automakers have forecast.

And there’s still a lot of work to exist done. GM has two major issues that poverty to be resolved. First, the company has to treat for through its bondholders to drop its unsecured offence burden from $27 billion to about $9 billion. Second, GM owes the UAW $20 billion to start a union-led trust fund to horsemanship retiree health care.

GM wants to give the UAW half in cash and half in store. But like bondholders, the UAW has balked. GM Chairman and Chief Executive Officer G. Richard Wagoner Jr., said the company is making good progress on both fronts. But GM could not strike a deal before the proposal to Treasury was owed.

Getting one as well as the other parties to reduce GM’s long-term debts will be vital to ensuring the company’sitting viability. The automaker has more than $60 billion in shortcoming between its creditors and the union. "What has weighed on us more than anything," Wagoner said, "is that we have a huge debt burden. We had to raise money to pay $103 billion in post-retirement benefits over the last 15 years."

Wagoner said GM’s cost cuts will make it profitable in a car market of 11.5 million to 12 million cars, with regard to 1 the great body of the people fewer vehicles than the company said it needed in December before it cut else jobs. If all goes according to plan, GM could return to profitability not above 24 months, Wagoner said. "Supporting GM’s viability is a utter investment according to U.S. taxpayers and one that will be paid back," Wagoner said.

GM has an offer on the table to a committee representing its bondholders, which the legal and financial advisors desire endorsed. It will be up to the bondholders to examine GM’s turnaround process and agree to the terms of the put forward to get a deal done.

GM said it also has a deal to ruin its labor costs with the UAW, but the partnership wouldn’t accord. details until UAW President Ron Gettelfinger took it to his members for a ratification vote.

But if Chrysler’s distribute with the UAW is an indicator—and the union usually treats totality three automakers in some degree equally—GM should be able to divide its remaining $20 billion in cash obligation to the union’s health-care trust by 50% and give the rest in stock. Chrysler said that the UAW agreed tentatively to swap half of its $10 billion in health-care funding obligations in opposition to equity on the supposition that Chrysler can successfully get banks and other debtholders holding $6.9 billion in debt to take two-thirds of that in fairness such as preferred loggerhead.

GM is in a resembling pickle. The bondholders will want to see that GM’sitting deal by the UAW goes far plenty. And the UAW wants to represent enduring that their concessions are going to make Wall Street investors whole. So both companies will have a job of shuttle diplomacy to get both deals done.

When social media site Facebook slipped in a clause giving it rights in perennity to users’ content, consumer watchdog groups and privacy experts cried foul. Now it’sitting backing distant from

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Mark Zuckerberg, CEO of Facebook, attends the Digital Life Design (DLD) conference onward January 27, 2009 in Munich, Germany. Sean Gallup/Getty Images for Burda Media

By Douglas MacMillan

It’sitting always a good idea to pay attention to the service terms on social media sites. The importance of reading the fine print became especially discerning over the President’s Day weekend during a recent brouhaha over social network Facebook and recent changes to the terms of service users must sign digitally before joining.

Initially, users paid little heed to a move by Facebook in early February to update its terms of religious rite, announced by a brief note without interruption the company blog by means of legal representative Suzie White, who said Facebook "simplified and clarified a lot of information that applies to you." At effect is the clause that says users, by signing on, bestow Facebook "an unchangeable., perpetual, non-exclusive, transferable, abundantly paid, worldwide license" to use, retain, and display contentment posted to the site. Facebook removed language saying that the license expires when a user leaves the site.

On Feb. 15, The Consumerist, a consumer blog, called attention to the changes, saying, "Now, anything you upload to Facebook can be used by Facebook in any way they deem fit, always, no matter what you finish later."

After witnessing an hubbub in the blogosphere and on Facebook’s own profile pages, on Feb. 18 the company retracted the changes and announced it would revert to its old articles of agreement of service. Chief Executive Officer Mark Zuckerberg explained in a blog inlet that the company had "current a catalogue of questions and comments about the changes and which they mean as being people and their information." The company is inviting users to contribute to a new version of its terms, in a group on the site called Facebook Bill of Rights and Responsibilities, which demise be formed over "the next few weeks," according to Zuckerberg.

Yet initially, Facebook executives had taken pains to purify the changes. A spokesman pointed out in an e-mail that the company wouldn’familiarily use information in a way that goes against the privacy settings outlined by dint of. users. For instance, it wouldn’t publicly show a photo that a user wished to be shared only with friends. "Any limitations that a user puts on display of the pertinent content are respected by Facebook," a company representative poignant out in an e-mail.

Zuckerberg said in a blog entrance that his company’session policies are comparable to those of e-mail service providers. "When a person shares something like a message with a confidant, pair copies of that information are created—person in the person’s sent messages box and the other in their friend’s inbox," Zuckerberg wrote. "Even if the person deactivates their account, their friend still has a copy of that message. We think this is the equitable way against Facebook to work, and it is correspondent through how other services like e-mail work."

But to what degree comparable were Facebook’sitting revised service terms to those of other social media sites? Legal and privacy experts speech Facebook was giving itself wider latitude in how it can use content than several other companies that rely on user-generated satisfied. Retaining rights to content after the user has left is exceptional for a social media place, says David Ardia, superintendent of the Citizen Media Law Project at Harvard’s Berkman Center for Internet & Society. Licenses granted to News Corp.’s (NWS) social network MySpace, Google’s (GOOG) video-sharing site YouTube, Yahoo’s (YHOO) photo-sharing site Flickr, and the microblogging seat Twitter "end at the time a user terminates his or her reckoning—or not above a reasonable time after termination," Ardia says. "In this regard, Facebook’s new terms of employment are a significant departure."

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The death of a 16-year-old girl in a Fort Lewis barracks is triggering a wide-ranging review of post policies that should have prevented her from entering the troops’ living quarters.

Those policies allow barracks access not at all other than when a minor is accompanied by a legalized guardian, according to a Fort Lewis spokesman. That did not appear to have happened Sunday when the sophomore from Lakes High School in Lakewood was lay the foundation of dead simultaneously with a advance 16-year-old lass who remains hospitalized.

The Army is investigating whether alcohol or drugs may have been involved, only a cause of death has not subsist released by Fort Lewis officials.

The incident is being viewed by numerous as a wake-up call at a put in the ledger where some say in that place is a long chronicle of underage girls flocking to party through soldiers.

“The command is taking this event very seriously,” uttered Joe Piek, a Fort Lewis speaker. “If changes need to be made to the policies, that may happen. And whether or not the policies in place need to be more thoroughly enforced and held to, then that may exist what happens.”

The girl who died was one of brace 16-year-olds found “unresponsive” at around 3:30 a.m. Sunday in a barracks, a Fort Lewis spokesman said Monday. The Lakes sophomore could not be revived and was pronounced dead at the scene while the second young woman remained hospitalized Tuesday at Madigan Army Medical Center. The deceased girl showed no signs of physical trauma or other obvious indications of what may have caused her departure, Piek said.

As of Tuesday evening, the names of the girls had not been released by family members or Fort Lewis, for all that post officials before-mentioned neither was a member of a soldier-like clan. The dead girl had attended ninth grade at Lakes High, further withdrew last fall and took online classes, according to spokeswoman Kim Prentice of the Clover Park School District. Prentice declined to stead the girl at the request of the family.

She said the girl re-enrolled at Lakes this month and had been attending regular classes.

Prentice said the school brought in a “grief-response team” of counselors for any student or staff member who of necessity them.

Students Joey Fitzpatrick and twin brothers Isiah and Joseph Alvarado described a subdued mood on campus Tuesday after students learned of the girl’s death.

“She was generally nice to people,” Joey Fitzpatrick said.

Some friends posted condolences on the dead girl’s MySpace Web page. The family besides posted a note, saying they had few details about what happened.

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CHICAGO — Sen. Roland Burris said Tuesday he is open to a Senate ethology inquisition into how he got the Senate seat from former Illinois Gov. Rod Blagojevich, and that he has reached out to a county accuser who is reviewing Burris’ sworn testimony in the presence of position lawmakers.

The Democratic senator’s comments came less than 24 hours after he acknowledged he sought to raise campaign funds for Blagojevich at the request of the manager’s brother at the same time Burris was seeking the station to the Senate seat previously held by President Obama.

It was the first time Burris has publicly admitted trying to elevate money for Blagojevich, and the account was the senator’s fifth version of his contacts with close associates of the quondam governor. Blagojevich was arrested Dec. 9 and enforced from office in late January in addition pollution allegations.

In comments to reporters after a Democratic dinner Monday night, the senator diverse times contradicted his latest under-oath affidavit that he silently filed with the Illinois House impeachment body of jurors this month. That affidavit was itself an attempt to clean up his live, sworn testimony to the panel Jan. 8, when he omitted his contacts with several Blagojevich insiders.

State Attorney General Lisa Madigan called towards the Sangamon County prosecutor in Illinois to investigate Burris’ testimony at the statehouse in Springfield, and her author, House Speaker Michael Madigan, without ceasing Tuesday forwarded Burris’ testimony and affidavits to State’session Attorney John Schmidt.

In a brief statement to reporters Tuesday in Peoria, Burris said an aide had reached out to the Sangamon County state’s advocate, who is reviewing testimony Burris gave last month to House lawmakers in Springfield about his contacts with allies of the ousted governor.

“I have made an effort to be during the time that transparent as I can, and I’m willing to choose a further act, as I esteem nothing to hide,” Burris said. “I welcome the opportunity to go before any and all investigative bodies, including those referred by Illinois Attorney General Lisa Madigan and the Senate Ethics Committee to answer any questions they have.”

The senator, who declined to answer questions, added, “There were never any inappropriate conversations between me and anyone besides. And I testament answer some and all questions to get that point across to keep my faith with the citizens of Illinois.”

Schmidt said he received Burris’ two affidavits and a transcript of the testimony he gave the House impeachment panel from the speaker’s office. He said he may inquire for supplemental information and documents.

“We are in the series of measures of reviewing them now,” said Schmidt, a Republican. “We started today when we received the documents.”

Republicans on Tuesday renewed their call for Burris to resign, adding that the newest revelation that he attempted to raise funds for Blagojevich only magnified his untrustworthiness.

Democrats largely were quiet on the issue of Burris voluntarily leaving office, through Gov. Pat Quinn saying end an aide that it is a cry out only Burris can put in order.

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The Jesuit order in the Northwest, beset by lawsuits alleging numerous instances of sexual abuse dating hinder part decades, has filed for bankruptcy.

The Society of Jesus, Oregon Province, filed in opposition to Chapter 11 reorganization Tuesday in U.S. Bankruptcy Court in Portland. The bankruptcy filing lists assets at $4.8 million and liabilities at $61.8 million.

“Our decision to file Chapter 11 was not an quiet one, except with approximately 200 additional claims pending or threatened, it is the only way we believe that all claimants can be offered a fair monetary fixture within the limited resources of the Province,” said the Very Rev. Patrick Lee, head of the province, in a statement.

Province officials have long said that greatest part of the local institutions associated by Jesuits — Seattle University, Gonzaga University, Seattle Preparatory School — are incorporated separately from the province, in the same manner bankruptcy should not affect them financially.

But victims’ attorneys put confidence in otherwise, and they have contended the Jesuits own the schools’ assets.

For years now, the province — what one. covers Washington, Oregon, Alaska, Montana and Idaho — has received a growing number of allegations of past abuses.

Most of those incidents took place in Alaska, whither other than 170 Alaska Natives have filed lawsuits saying they were sexually abused years ago by Jesuits or those supervised by Jesuits.

A plaintiffs’ attorney called the remote Alaskan villages a “pedophile’s paradise,” a dumping establish for troubled priests — a characterization rural leaders have again and again rejected.

Still, the province settled with 110 Alaska Native victims for $50 very great number last year — with $45 a thousand thousand paid by the province’s insurers.

Since January, 63 more Alaska Natives be under the necessity filed suit, and their lawyers said many more suits are pending.

“The Oregon Jesuits are using the bankruptcy courts to selfishly fight shy of litigation that demise prove provincial hegemony used Alaska Native villages as a dumping ground in quest of sexual predators,” said plaintiffs’ attorney John Manly. “This bankruptcy has nothing to chouse with revenues — the Jesuits are one of the wealthiest religious organizations in the United States. This filing is hither and thither protecting the hierarchy and those who covered up for abusers.”

In Washington state, settlements have included a 2008 agreement to smear $4.8 million to 16 Native Americans sexually and physically abused years ago by a Jesuit priest and Jesuit brother when they were students at a boarding school near Omak.

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Plummeting sales-tax revenues could leave Metro Transit by a $100 million funding gap and potentially “catastrophic” cutbacks in bus service next year, the agency warned Tuesday.

Unless the Legislature agrees to authorize a local option motor-vehicle internal tax tax, King County officials said, the free-fall in retail sales will likely translate into a 20 percent cut in bus service.

The amount of lost riches is equivalent to what it takes to provide daily bus office for 75,000 passengers a day, Metro reported Tuesday. King County Executive Ron Sims said that would potentially dirty reducing service to early 1990s levels.

“It’s huge. It’sitting a carcass blow. It’s nothing we ever conceived of,” Metro Transit General Manager Kevin Desmond said moments before he briefed the Metropolitan King County Council without ceasing the implications of the bus agency’s tumbling revenues.

Two-thirds of Metro’s income comes from sales accuse.

After county officials decided to raise fares in three 25-cent increments between latest March and nearest January, Desmond said he didn’t know grant that fares could be raised another time on the outside of driving away riders.

Ridership has increased by 20 percent over the past three years.

County Budget Director Bob Cowan said human services also will be hurt by the bad revenue news.

Revenues from the recently adopted Mental Illness and Drug Dependency sales demand are now projected to fall $3.3 million among the shades the earlier 2009 valuation of $48.4 million and $4.4 million below the earlier 2010 estimate of $50.8 million.

Cowan resoluteness fleeting the County Council next month adhering the general fund. “It’s down,” he said. “The question is: Is it going to be down 3 percent, 5 percent, 8 percent, 9 percent? Things are bad.”

The $670 million general fund pays for many services, from elections to animal control and courts to jails.

Desmond before-mentioned Metro may be able to disentangle a commencing 2008-09 shortfall of $28.9 the multitude by drawing into disrepute reserves, and possibly with help from the economic-stimulus package signed Tuesday by President Obama.

Analysts’ opinions on public securities in the news Tuesday

From Standard & Poor’s Equity Research

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S&P MAINTAINS HOLD OPINION ON SHARES OF SIRIUS XM RADIO (SIRI; .10):

SIRI enters pact for two-phase $530 a thousand thousand investment by Liberty Media (LMDIA; 19, NR), for 12.5 the great body of the people preferred shares interchangeable into 40% of SIRI. LMDIA’s Malone and Maffei would go into SIRI board. SIRI would skirt bankruptcy on $175 million notes due today. Still, with 15% coupon upon the body phase-one $250 the public notes right 2012, we see continued tenuous credit, ahead of $350 million of revolver/term lend due in May, and $228 million of notes due December. LMDIA’s pact seems motivated by its DirecTV (DTV; 23.24) designs, edging Charlie Ergen-controlled DISH (DISH; 13.58), though conceivably resurfacing in action for control. -T. Amobi - CPA, CFA

S&P REITERATES STRONG BUY RECOMMENDATION ON SHARES OF WAL-MART STORES (WMT; 48.18):

WMT reports January-quarter operating EPS of $1.03, vs. $1.05, $0.05 ahead of our presumption. Results benefited from comparable-store sales growth of 2.8% (excluding fuel) and a lower tax rate, despite some unfavorable forex impact. We put faith in WMT is optimally positioned to win to significant market share in the weak economic environment through its low-priced staples and basics discretionary offerings. Due to increased forex pressures, we are keeping our fiscal year 2010 (January) operating EPS estimate of $3.55. We are reducing our 12-month target price by $1 to $57 on comparative and p-e analyses. -J. Agnese

S&P DOWNGRADES RECOMMENDATION ON SHARES OF AMEREN CORP TO HOLD FROM BUY (AEE; 27.17):

Shares on the ground about 15% today following AEE’s announcement that it has cut its dividend by 39%, effectively reducing the yield from 7.9% at Friday’s close to 5.7% at the shares’ generally received price. Fourth quarter operating EPS of $0.45, vs. $0.60, is $0.09 above our estimate. Both fourth quarter and full-year 2008 operating EPS, $2.95 vs. $3.30, were hurt by higher fuel and operating costs. We are reducing our 2009 EPS estimate by $0.23 to $2.95 to reflect the impact of a weak economy and power market. We are moreover cutting our 12-month target price by the agency of $8 to $29, a discount-to-peers p-e of 9.8 general condition of affairs our 2009 valuation. -J. McCann

S&P RAISES OPINION ON MEDTRONIC SHARES TO BUY FROM HOLD (MDT; 35.32):

January-quarter operating EPS of $0.71, vs. $0.63, is $0.01 above our recently lowered estimate, aided by forex hedging gains and lower tax censure than we expected. Sales rose just 3% from year-ago, but 6% ex-currency, in line with our estimate. We think MDT performed fortunate in competitive ICD category and give faith to investors will gravitate toward shares because of its product line diversity and ability to sustain high levels of free cash pour. We collect fiscal year 2009 (April) EPS estimate by $0.06 to $2.91, but keep financial year 2010 at $3.20. On a forward p-e in line with peers, we boost our target compensation $8 to $42. -R. Gold

S&P MAINTAINS HOLD OPINION ON SHARES OF COLDWATER CREEK (CWTR; 2.28):

CWTR guides on this account that January-quarter by share loss of $0.23-$0.25 vs. year-ago loss of $0.19. We see continued weakness in retail environment weighing on CWTR in 2009 as consumers shop less and often wait instead of markdowns to buy. We anticipate CTWR to focus adhering controlling expenses and fortifying its balance sheet, as with praise as working to raise the patron experience at its stores. We widen our financial year 2009 (January) loss estimate to $0.33 per share from a loss of $0.11, and fiscal year 2010’s to a $0.18 loss from $0.04 EPS. We cut our 12-month price target through $1 to $3, 10.7 times our financial year 2011 EPS estimate of $0.28. -P. Wang

Liberty Media’s John Malone may widen his empire again through an 11th-hour redemption of Sirius XM

By Ronald Grover

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In his 1990s heyday at the helm of cable TV behemoth Tele Communications, John Malone was routinely labeled "The King of Cable." He was lauded for his leadership of a then-struggling industry. Today, the 67-year-old Malone may have just get to be the Satellite King.

By injecting as a great deal of of the same kind with $530 million into ailing secondary planet radio party Sirius XM (SIRI), Malone’s Liberty Media (LMDIB) is poised to hold sway over a stable of companies that use secondary planet technology to deliver TV, radio, and broadband to added than 37 million subscribers. "We be under the necessity been impressed with the company, its operations and management team," Liberty CEO Greg Maffei said in a statement. "Sirius XM’session ability to increase subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a ‘fustiness have’ service." Sirius XM has 18.9 million subscribers after the merger last year of two wobbly competitors, Sirius Satellite Radio and XM Satellite Radio.

People with knowledge of Liberty Media say Malone and Maffei believe they’re investing in a very greatly undervalued asset. Malone, a billionaire media maven, for years has been enamored through satellite, that he considers a cheaper alternative to cable TV and phone service. Under his agreement with Sirius, Malone’s company will invest up to $530 million and could portray a 40% martyrdom in the collection, though it is blocked for three years from taking a stake larger than 49.9%. That could give Malone, who joins the Sirius council along with Maffei, the time he needs to make Sirius a working part of larger moon ambitions.

Malone, a Yale-educated engineering PhD, hasn’t said what those ambitions are, but he has a reputation for thinking distinct steps ahead of his peers. "If there is something to make public of all of this, John Malone probably has it figured out already," says Jimmy Schaeffler, chief executive official of the digital consulting firm Carmel Group. For starters, Malone’s Liberty Entertainment unit owns a 48% stake in DirecTV (DTV), the nation’s largest dependant TV operator, with 17.6 very great number subscribers. DirectTV before that duration of one’s life offers music from the Sirius XM service, only it could market the products to customers for use in their cars at a fraction of the current $12.95 monthly subscription fee for Sirius XM. Liberty could also mounting unfamiliar satellite spectrum controlled by Sirius XM to offer more channels of video.

An equally crafty prospect is how Sirius might fit with Liberty’s 37% stake in WildBlue Communications, which offers wireless broadband for $49.95 a month to mostly rural customers who can’t get high-speed Internet access from a topical phone company. The service currently has 380,000 subscribers, a 10% increase in the last six months, bound could likely do a great deal of better if it was marketed alongside Sirius radio.

Down the road, Liberty and Sirius XM are likely to weigh combining operations, says Larry Rosin, president of Edison Media Research . "I assume that they are going to eventually talk here and there a merger," Rosin says.

The Korean mobile-phone giants are on the march. Having overtaken Motorola, they are challenging Nokia in fast-growing emerging markets

By Moon Ihlwan

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As the movers and shakers of the mobile industry meet in Barcelona for the annual Mobile World Congress, which kicked off on Feb. 16, few handset makers see a brighter 2009 than the Koreans. Even as the undisputed leader, Finland’s Nokia (NOK), is invigorating for the global mobile-phone industry’s first year of contraction in eight years, executives at Samsung Electronics and LG Electronics say they are determined to grip suddenly market share from rivals new or old. "The keyword for 2009 is yet more dramatic growth," says Lee Younghee, Samsung’s vice-president for overseas marketing.

The Korean phonemakers were among the best performers in the past year. After Samsung overtook Motorola (MOT) in the manner that the world’s second-largest handset signer of a promissory note in 2007, LG passed Motorola as the No. 3 in 2008. To keep up the momentum, LG President Skott Ahn has set a mark of achieving double-digit emporium share as far as concerns the first time this year, against some estimated 8.6% last year, when LG hit a sales record of 100.7 very great number units, up 25% from a year earlier.

LG’sitting goal is to outgo Apple (AAPL) by matching its innovation and offering superior phone functions. Ahn points out that although consumers fall emotional satisfaction with the iPhone’s intuitive design and easy use, its frequent disassociation and short battery life violate many users to carry brace phones. "My method is to let consumers carry just one" by providing easy use, fast response, attractive sketch, and excellent connectivity, he says.

Turning up the dial on introduction of novelty isn’t new for LG. In thing done, it has emerged from a second-tier mobile-phone player three years agone to one of the top three by dint of. making a blot with such hit products as the Chocolate, Shine, and Viewty phones, each of which sported a distinctive mien and feel. Also, in the race to throw a touchscreen gauge in 2007, it beat the iPhone by three months with its Prada phone, designed in a tieup by the luxury Italian conventionalism company.

In a new attempt to create hum, LG is unveiling in Barcelona its new flagship handset, called Arena, featuring touch-based, three-dimensional menus. With a gentle sideways touch, the cube-based menu rotates four customized home screens in favor of direct access to all functions, including video, MP3 music, ultra-fast Internet access, and GPS-based location services. LG is also collaborating through Intel (INTC) to develop a smartphone using the American chip giant’s new processor, code-named Moorestown, designed to reduce power consumption below that of the Atom chip now widely used in netbook computers.

LG’s path to success is uniform to that of crosstown rival Samsung. Taking advantage of the downward screw-shaped of Motorola and hemorrhaging Sony Ericsson, the joint venture between Japan’s Sony (SNE) and Sweden’s Ericsson (ERIC), the Korean electronics powerhouse has been cementing its condition as the only credible challenger to Nokia. In the past two years, Samsung has increased its global market receive by 5.1 percentage points, to 16.7%, and executives possess said the company’s target is to top 20% this year.

A last-minute deal with Liberty Media saves the floundering hanger-on radio company Sirius XM from bankruptcy or acquisition

By Phil Mintz

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Embattled Sirius XM Radio (SIRI), facing an imminent deadline to pay $172 million in debt, was rescued end a deal with Liberty Media (LMDIA) that will give Liberty and its billionaire Chairman John Malone, owner of DirecTV (DTV), shares of preferred neckcloth and two seats without interruption the Sirius XM board in exchange for $430 a thousand thousand in loans, to be doled completely in two phases. Sirius reportedly had been preparing for a possible Chapter 11 bankruptcy filing, but the party’s shares, which had been mercantile for as little as 10¢, gained sharply in succession the Feb. 17 announcement.

The degree represents a suspension of punishment by means of reason of Sirius CEO Mel Karmazin, who had been under pressure from satellite TV mogul Charles Ergen, who had bought much of the outstanding Sirius debt and appeared poised to take control of Sirius. Ergen, who heads Dish Network (DISH) and EchoStar Communications (SATS), appears to have a consolation privilege, having bought up the debt on the inferior.

Three oversize personalities shape the traffic’s dynamic. Karmazin has been gathering with Ergen since 2004, when Ergen pulled Viacom’s MTV and Nickelodeon channels from Dish Network for the period of a contract dispute. Karmazin was Viacom’s (VIA) chairman at the time. Malone, meanwhile, probably wouldn’t want to see Sirius fall into the hands of competitor Ergen.

Under the first phase of the deal, Sirius XM will get a $280 million older secured loan from Liberty, $250 a thousand thousand of what one. is to be paid today. Sirius will application the effect to pay the $172 million in debt that is due today and will exercise the balance for acting first-rate and transaction costs. The loan carries a 15% interest rate and matures in December 2012.

Under the second phase of the deal, Liberty will loan an superadded $150 million to Sirius XM’sitting subsidiary, XM Radio. When that is completed, Liberty will get 12.5 million shares of preferred stock convertible into 40% of the common stock of Sirius XM. Also included in the deal are two seats on the Sirius food, expected to be taken by Malone and Liberty CEO and President Greg Maffei, according to a joint announcement from the companies.

Liberty will also buy up to $100 million of Sirius’ generally outstanding debt.

"Liberty’session investment is one important validation of what Sirius XM has already achieved and a vote of confidence in what we direction achieve," Karmazin said in a statement.

Maffei, for his turn, suggested that Liberty sees in posse because of satellite radio, strange to say in the economic downturn. Satellite radio installed in new cars is an important source of subscribers on the side of Sirius XM.

"Sirius XM’s ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a ‘must-have’ official function," Maffei said in a statement.

Despite the imminent delay the punishment of given to Sirius by the Feb. 17 deal, Sirius still faces an uphill battle, with another $250 million in notes due in May and $228 million in December. "We see continued tenuous credit," Standard & Poor’s algebraist Tuna Amobi declared in a research note, reiterating a hold opinion on the shares.

In late-morning trading, Sirius shares gained 70%, to 18¢, while Liberty shares slid 4%, to 18.25.