The international satellite radio company doesn’t have the option its US counterparts chose to try to stop its cash burn – it has no peer to merge with. WorldSpace has entered into a third forbearance agreement with the four holders of its bridge loan and convertible notes. It’s also entered into a new $20 million loan facility with Yenura Pte. Ltd. of Singapore, a company controlled by WorldSpace CEO Noah Samara.
To secure the breathing space, WorldSpace has agreed to pledge two-thirds to 100% of its equity interest in its European subsidiary to the collateral agent of its bridge loan and convertible notes holders. It paid the debt holders $18.5 million last week – representing interest accrued and approximately $15.2 million of principal outstanding on the bridge notes. In addition, the note holders agreed that the September 30, 2008 maturity date of the convertible notes will be changed to December 31, 2008 if WorldSpace has paid in full on or before September 15, 2008 all amounts due on the bridge loan notes. After the latest forbearance agreement was filed with the SEC on Friday, WorldSpace’s stock price dropped more than 20% to below $2.
RBR/TVBR observation: It remains to be proven that subscription satellite radio is a viable business anywhere in the world. WorldSpace has yet to report its Q2 results, but Q1 was pretty dismal. Revenues were flat overall, but subscription revenues declined slightly and the company reported a loss of 2,696 subs from a year earlier to 171,470 total. The net loss for the quarter was $36.8 million, up from $35.5 million a year earlier.