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Subject:  Re: Additional Funding Requirements Date:  8/22/2002  12:45 AM
Author:  MarkMarcellus Number:  1684 of 10889

Since there is no other share class, and Leon Black owns these shares alongside of me, I stand by my comment that I find this reassuring rather than threatening to me.

Quite frankly, I don't think you understand how restructurings work in situations like this. The latest 10-Q explains it pretty well:

"We are also in discussions with affiliates of Apollo Management, L.P. and The Blackstone Group L.P. regarding a substantial additional investment in our common stock. The terms of any transaction with Apollo and Blackstone will require the approval of a recently-appointed special committee of our board of directors, consisting solely of independent directors. The special committee has engaged the investment banking firm Miller Buckfire Lewis & Co., LLC, as well as separate counsel, to advise it.

We cannot assure you that we will be able to arrange for additional equity capital, consummate a transaction to exchange debt for equity or consummate any transaction with Apollo and Blackstone. Given the current price of our common stock on the Nasdaq National Market, consummation of any of these transactions will dramatically reduce the percentage ownership interest of the current holders of our common stock. If we fail to timely raise additional funds, we will be forced to seek protection under the United States bankruptcy code, materially reduce our operations, significantly alter our business plan and/or seek the sale of our company." (italics added for emphasis)

To give a simpler example. Assume you own 50% of the equity in a company with a partner who owns the other 50%. In addition, assume that this partner also holds secured debt against your company and the company is unable to pay. Your partner can then force the company into a restructuring, or even a bankruptcy reorganization, that turns the debt into equity, which in turn reduces the value of both partners' equity holdings. Although your equity holdings were both equally affected, the partner now owns more than 50% of the company, and perhaps as much as 100%. Your interests were not aligned even though your equity stakes were identical.

If you're going to accuse anyone of trying to "spook" people out of investing in Sirius, it should probably be me. I've been warning people about the pitfalls of this stock for years, and been greeted with varying degrees of hostility. Something about this company seems to capture people's imagination to the point that they are willing to throw rational financial analysis out the window.

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