XM Radio Auditor Voices ‘Going Concern’ Doubts

20 March 2002

XM Satellite Radio Holdings, the fledgling US pay-radio operation, may be unable to continue as a going concern, according to an SEC filing by its auditor KPMG LLP.

Even allowing for the pathological caution of auditors in the wake of the Enron/Andersen debacle, the news triggered a 13% dive in XM shares on the Nasdaq Stock Market on Tuesday, levelling out at $2.00 (€2.27; £1.41).

But XM president and chief executive Hugh Panero insisted yesterday that the company “sees no problem in accessing capital,” and is confident that its financial position remains sound.

Since its launch, the Washington-headquartered broadcaster has raised from investors and strategic partners some $1.5 billion of equity and debt net proceeds. Panero says he expects no difficulty in obtaining futher funding for operations through 2002.

According to the SEC filing, XM has sufficient cash to maintain itself until the end of 2002 but will need an injection of $40m to $65m to continue through the end of the year [sic], plus additional funding thereafter.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff