Sirius XM Radio Inc., the satellite- radio broadcaster, rose as much as 43 percent in U.S. trading on a Wall Street Journal report that EchoStar Corp. bought a stake in its maturing debt.
EchoStar, the satellite-television group run by Charles Ergen, acquired part of a $300 million tranche maturing Feb. 17, the Wall Street Journal reported, citing people familiar with the matter. It isn’t clear if Ergen participated in a debt-for-equity exchange that cut the debt outstanding to about $175 million, the Journal said.
Sirius XM advanced 5 cents to 19 cents at 10:21 a.m. New York time in Nasdaq Stock Market composite trading after rising as high as 20.4 cents, a two-month high. Before today, the stock had slumped 91 percent since the merger of Sirius and XM Satellite Radio Holdings Inc. was completed in July.
The company is facing about $925 million in debt repayments this year. Over the past month, the broadcaster has been exchanging debt for shares to reduce the debt due in two weeks. The stock has traded below $1 since Sept. 20 on investor concern that Chief Executive Officer Mel Karmazin may not be able to manage the debt and meet growth projections.
Echostar may be pursuing a plan to use the debt as a way to control Sirius XM inside or outside of bankruptcy, the Journal reported.
Patrick Reilly, a spokesman for Sirius XM, didn’t immediately return a phone call and an e-mail seeking comment, neither did Kathie Gonzalez, a spokeswoman for EchoStar.
