Sirius XM gets some more breathing room


Liberty Media has closed the second phase of its investment in Sirius XM and now holds preferred stock convertible into 40% of the satellite radio company’s common stock. Lenders have also agreed to extend the Sirius XM debt that was to have come due in May, with Liberty buying $100 million of that $350 million in debt from the lenders.

"We are excited to have closed the second and final phase of our investment agreement with Liberty Media. It is an example of the confidence our lenders and Liberty have in our business model. These transactions resolve all of the uncertainty surrounding the company’s and its subsidiaries’ debt maturing in 2009. Having addressed our near-term financial obligations, we remain focused on continuing to deliver on all the promise of the merger of SIRIUS and XM — a more efficient company offering the best programming through new packages to more subscribers," said Sirius XM CEO Mel Karmazin.
"We are pleased to have completed the second phase of this investment," said Greg Maffei, President and CEO of Liberty. "This closing allows Liberty to align itself with one of the most exciting companies in media today," he added.

The deal cut in February as Sirius XM was on the verge of a Chapter 11 bankruptcy filing has John Malone’s Liberty Media making a total loan/investment of $530 million to Sirius XM. Phase one provided $280 million in loans and enabled Sirius XM to pay off $175 million or so of bonds that came due February 17th, with most of that cash going to EchoStar, where CEO Charlie Ergen had also been bidding to take control of Sirius XM.

As phase two closed last week, XM Satellite Radio, a wholly owned subsidiary of Sirius XM, amended and extended its existing $350 million credit facilities. XM Satellite Radio’s existing term loan and revolving loan have been rolled into a single term loan facility. As previously agreed, Liberty has purchased $100 million aggregate principal amount from the lenders.

Liberty has committed to loan an additional $150 million to XM Satellite Radio, to be used to repay a portion of the outstanding principal amount of 10% Convertible Notes due December 1, 2009 of XM Satellite Radio Holdings Inc.

As provided for under the agreement, Sirius XM has issued Liberty an aggregate of 12.5 million shares of new preferred stock convertible into 40% of the common stock of Sirius XM.

RBR /TVBRobservation: You’ve got to hand it to Mel Karmazin, he played John Malone and Charlie Ergen against each other and saved his company. After more than a decade of predicting the collapse of satellite radio, we’d now have to bet that it will continue indefinitely, at least in some stripped down form.