shares slipped Wednesday morning after the cash-burning pay-radio company rolled out its latest financing arrangement.
Sirius said it would raise about $150 million by selling 73.2 million shares. UBS Securities will underwrite the offering, which is expected to close on Monday, Sirius said.
The offering comes just eight months after Sirius completed a $1.2 billion recapitalization that put the lion's share of its stock in the hands of its bondholders. The stock slipped 5% to $2.11 in early trading Wednesday.
The move comes at the end of what has been an eventful year in the satellite radio business. Shares in New York-based Sirius and its Washington, D.C.-based rival,
XM Satellite Radio
, have surged as growth-hungry investors have piled into this highly speculative area. Shares of XM have jumped 700% this year, with Sirius up some 200%.
Both companies offer 100 radio stations or so for around $10 to $15 a month. The companies have signed partnerships with all the big automakers, a fact that has satellite radio bulls saying it's only a matter of time until their product becomes a mass-market standard.
And indeed, in just two years XM has signed up 1 million customers, and the company recently
boosted its subscriber targets for next year.
But both Sirius and XM continue to burn cash at a ferocious rate, as the massive cost of building their business dwarfs the tiny revenue streams coming in at the moment. And recent numbers suggest that XM is outperforming Sirius on a number of fronts. In fact, in last quarter's earnings report, Sirius noted a setback in its weaker-than-expected growth data and
sharply rising subscriber-acquisition costs.