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Charles Ergen's EchoStar Corp. [SATS
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] has quietly accumulated a substantial portion of Sirius XM Satellite Radio Inc.'s [SIRI
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] maturing debt in what could be the first salvo in an attempt to take control of the company, the Wall Street Journal said, citing people familiar with the matter.
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Ergen, who controls a satellite-television empire around Dish Network Corp. and EchoStar, recently acquired part of a $300 million tranche of Sirius debt that matures on February 17, the people told the paper.
Sirius recently converted part of the debt to equity, reducing the total debt outstanding to about $175 million, according to the paper.
It is not clear whether Ergen participated in the exchange, the paper said, adding that he could also be buying up senior bank debt, due in May, which trades on the over-the-counter market.
Echostar could be pursuing a plan to use the debt as a way take control of the company either inside or outside of bankruptcy, the Journal said.
An EchoStar spokesman declined to comment on the report. Sirius could not be immediately reached for comment by Reuters.
According to Standard & Poor's, Sirius has $175 million of convertible notes maturing in February, $350 million of secured bank debt due May 2009, and $433 million in convertible notes due December 2009.
In December, Sirius Chief Executive Mel Karmazin said that while the tight credit market has made it difficult to get optimal terms, he is confident the company can refinance the debt.
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