Summary:

So much for all those people who bought Sirius (NSDQ: SIRI) stock last week. The company’s shares almost doubled on Feb. 4 following reports…

So much for all those people who bought Sirius (NSDQ: SIRI) stock last week. The company’s shares almost doubled on Feb. 4 following reports that EchoStar (NSDQ: SATS) CEO Charlie Ergen was aiming to cut a deal with Sirius to take control of the beleaguered satellite radio operator. But it’s becoming increasingly clear — as we reported at the time — that the power play between Ergen and Sirius CEO Mel Karmazin isn’t going to end well for shareholders. With Karmazin now seeing Chapter 11 as a viable option, or at least a negotiating ploy with Ergen, the shares plummeted in after-hours trading, to below $0.10. Here are the likely possible scenarios moving forward– and either way, shareholders are in trouble:

– Ergen and Karmazin cut a deal, injecting some cash into Sirius and converting its remaining $500 million-plus into equity. Common shareholders get diluted to virtually nothing.

– Sirius goes into Chapter 11 bankruptcy. Common shareholders are wiped out.

Comments have been disabled for this post