The Wall Street Journal reports (subscription) that Sirius XM chief Mel Karmazin is "scrambling to raise about $175 million" to fend off a takeover threat from Charlie Ergen's EchoStar Corp.
Ergen, ranked by Forbes as the #35 richest man in America (net worth $8.1 billion), has been buying up Sirius XM's debt, to the tune of $400 million, since late summer, the Journal reports:
Sirius XM Radio Inc. Chief Executive Mel Karmazin is scrambling to raise about $175 million by Feb. 17 to fend off the company's bankruptcy and a possible takeover threat from EchoStar Corp.
Sirius has been in talks for several weeks with EchoStar, which holds around $400 million of the satellite-radio company's debt, people familiar with the matter said.
EchoStar Chairman and Chief Executive Charles Ergen, who is believed to be seeking control of Sirius, has been accumulating Sirius debt since late summer, the people said. EchoStar holds most of the $175 million in Sirius debt expiring in February and owns more than half of a $400 million tranche coming due in December. Both stakes were purchased from hedge funds. Sirius's total debt load is $3.25 billion. Sirius didn't respond to a request for comment.
The Journal describes the process of takeover by acquiring debt as "an unorthodox strategy" and one that "could backfire."
Karmazin successfully merged Sirius with XM Satellite radio in July 2008. Ergen was ranked the #1 richest media mogul in Forbes' recent breakdown of billionaires by industry.