The heavy lifting was done last year, when Sirius XM escaped having to go Chapter 11, but there’s still work to be done on the company’s capital structure. Some of that is taking place now.
XM Satellite Radio, a wholly owned subsidiary following the corporate merger, has announced a tender to buy back any and all of its 11.25% senior secured notes due 2013, of which about $526 million are outstanding. For notes tendered by an October 26th consent deadline the company is offering to pay $1,120 per $1,000 face value. Those tendered after that deadline but by the closing of the tender on November 9th are to be paid $1,100 per $1,000 face value.
Where’s that cash coming from? Why, from selling new senior notes due 2018 in a private placement. That issue will total $550 million. It hasn’t been priced yet, but given the current bond market it should be somewhat cheaper than the issue being bought back.