October 17, 2008 / 4:20 PM / 11 years ago

Sirius XM considers reverse stock split

NEW YORK, Oct 17 (Reuters) - Sirius XM Radio Inc (SIRI.O) is considering a reverse stock split in an effort to lift its depressed share price and avoid the risk of being delisted from the Nasdaq stock market, the satellite radio company said.

Sirius, whose share price has plunged below 40 cents due to concerns about subscriber growth and its ability to repay debt, has asked shareholders for the right to declare a reverse split of its common shares by a ratio somewhere between 1-for-10 to 1-for-50, it said in a filing late Thursday.

One of Nasdaq’s criteria for remaining listed on the exchange is that a company’s common stock must have a trading price of $1.00 per share, and remain at that level for 30 straight business days.

Sirius’s shares have traded below $1 since Sept. 19.

“Although our common stock’s trading price has not been below the $1 per share level for 30 consecutive trading days ... we believe that approval of this proposal would significantly reduce our risk of not meeting this continued listing standard in the future,” the statement said.

The plan, already approved by Sirius’s board, comes after Chief Executive Mel Karmazin said in August that there were no plans for a reverse split.

Sirius closed its purchase of rival satellite radio operator XM Satellite in July, after waiting for regulatory approval for 17 months.

The shares traded down 2 cents at 37 cents on Friday and have lost about 75 percent of their value since July, when they sold at around $1.60.

If ratified, the plan would shrink the number of outstanding shares from anywhere from about 65 million to 320 million shares from the current 3.2 billion shares.

In the filing, the company also asked shareholders to approve a plan to increase the number of authorized shares of common stock to 8 billion from 4.5 billion. Sirius has about $1.05 billion in debt due to mature in 2009, and may sell stock to pay the obligation if it's unable to refinance. (To read more about our Media news, visit out MediaFile blog online at blogs.reuters.com/mediafile) (Reporting by Franklin Paul; editing by Jeffrey Benkoe)

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