Tuesday, February 17, 2009
Sirius/XM Gets Big Infusion Of Cash
Under the first phase of the transaction, Liberty (LCAPA)(LMDIA) will loan Sirius XM $280 million -- $250 million of which will be funded on Tuesday. Sirius XM will use some of the proceeds of that loan to pay $171.6 million of the $175 million in 2 1/2% convertible notes that are due at the end of business Tuesday.
Liberty's loan to Sirius XM will bear interest at a rate of 15%, and will be due in December 2012. It will be secured by the assets that secure Sirius XM's existing credit agreement.
In the second phase of the deal, Liberty will loan another $150 million to XM Satellite Radio, Sirius XM's wholly-owned subsidiary. Liberty has also agreed to offer to buy up to $100 million of the loans outstanding under XM's existing debt agreements.
Once both phases are completed, Sirius XM will issue Liberty 12.5 million shares of preferred stock, which Liberty can convert into 40% of the company's common stock. Liberty Chairman John Malone and Chief Executive John Maffei would then join Sirius XM's board of directors.