SG Cowen downgraded WorldSpace (WRSP
) to neutral from outperform, explaining that the company faces higher risks given its debt.
Analyst Tom Watts says a recent question and answer session with the company focused on the likelihood that the company's $155 million in Convertible Promissory Notes will be put to the company on Dec. 31, 2007, if WorldSpace's stock price falls below the $13.52 conversion price. (It currently trades at around $9 per share.) He says this could create liquidity issues in 2007 and notes that management guided to cash burn in 2006 of $9 million to $12 million per month.