WASHINGTON — The stock of XM Satellite Radio Holdings, Inc. closed about 2.5 percent higher Feb. 23, a slight recovery from a 26-percent drop a day earlier following the company’s announcement that it needs to raise an estimated $175 million this year.
The value of XM’s stock dropped $4 per share to $11.38 Feb. 22 on the news. It closed Feb. 23 at $11.69
In an announcement issued Feb. 21 after the close of the Nasdaq market where the company’s stock is traded, XMSR said it plans to issue convertible notes and five million shares of Class A common stock., the Washington-based company said in a statement.
The offering is being underwritten by New York-based Bear, Stearns & Co. Inc., the statement said.
J. Armand Musey, satellite analyst for Banc of America Securities, said in a report that the offering could raise approximately $175 million and would fund the company until the end of the year.
Gregory Cole, XM’s director of investor relations, did not return a voice mail message before posting of this item.
The launch of the first satellite in XM’s planned two-satellite system aboard a Sea Launch rocket has been delayed until March 18. The second satellite is scheduled for launch in May with the company’s digital radio service slated to begin this summer
Washington-based XM is one of two companies vying for the U.S. satellite radio market. Sirius Satellite Radio Inc., New York has already deployed its three-satellite system and plans to begin marketing its service this summer.
"We believe a large amount of potential bad news is already priced into XM’s stock, as the market waits for proof of demand, Musey said. "As XM moves from story stock to execution stock, we believe any deviation from projected milestones [good or bad] could have a large effect on the stock."
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