Liberty Makes Loan to SIRIUS XM to Repay 2 1/2% Convertible Notes due February 17, 2009
Agreement Provides for Additional Loan
Liberty to Acquire SIRIUS XM Preferred Stock and Board Representation in Connection with Investments
SIRIUS XM Radio Inc. (Nasdaq: SIRI) and Liberty Media Corporation (Nasdaq: LINTA, LINTB, LCAPA, LCAPB, LMDIA, LMDIB) today announced that they have entered into agreements pursuant to which Liberty will invest an aggregate of $530 million in the form of loans to SIRIUS XM and its subsidiaries and receive an equity interest in SIRIUS XM.
Under the terms of the agreements, the investments will be funded in two separate phases.
- The first phase includes a $280 million senior secured loan from Liberty to SIRIUS XM, $250 million of which will be funded today. The proceeds of that loan will be used by SIRIUS XM to repay $171.6 million of its maturing 2 1/2% Convertible Notes due February 17, 2009, and the balance will be used for general corporate purposes, including working capital and transaction costs. The loan will bear interest at a rate of 15%, mature in December 2012, and be secured by the assets securing SIRIUS XM’s existing term credit agreement.
- The second phase provides an additional loan of $150 million to XM Satellite Radio, SIRIUS XM’s wholly owned subsidiary. Liberty has also agreed to offer to purchase up to $100 million of the loans outstanding under XM Satellite Radio’s existing credit facilities from the lenders.
Upon completion of the second phase of the Liberty investments, SIRIUS XM will issue Liberty an aggregate of 12.5 million shares of preferred stock convertible into 40% of the common stock of SIRIUS XM. In addition, Liberty will receive seats on the SIRIUS XM Board of Directors proportionate to its equity ownership. It is expected that John Malone and Greg Maffei will join the SIRIUS XM Board of Directors. Liberty’s obligation to consummate the second phase of its investment is subject to various closing conditions.
Mel Karmazin, Chief Executive Officer of SIRIUS XM Radio, said, “We are pleased to have come to this agreement with Liberty Media, particularly in light of today’s challenging credit markets. Liberty’s investment is an important validation of what SIRIUS XM has already achieved and a vote of confidence in what we will achieve. This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM. By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”
“We are excited to be investing in SIRIUS XM. We have been impressed with the company, its operations and management team,” said Greg Maffei, president and CEO of Liberty. “SIRIUS XM’s ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a “must have” service.”
The agreements, and the transactions contemplated by the agreements, do not constitute a change in control for SIRIUS XM under its outstanding debt instruments and are not subject to the approval of the Federal Communications Commission. The receipt by Liberty of voting stock is subject to expiration of the applicable waiting period under the Hart-Scott-Rodino Act.
Important details of the agreements relating to this investment will be available on a Current Report on Form 8-K which SIRIUS XM expects to file with the Securities and Exchange Commission.
Liberty has advised that its investment will be attributed to the Liberty Capital group and is not expected to affect the timing of the previously announced split-off of a portion of Liberty Entertainment.
About SIRIUS XM Radio
SIRIUS XM Radio is America’s satellite radio company delivering commercial-free music channels, premier sports, news, talk, entertainment, traffic and weather, to more than 18.9 million subscribers.
SIRIUS XM Radio has content relationships with an array of personalities and artists, including Howard Stern, Martha Stewart, Oprah Winfrey, Jimmy Buffett, Jamie Foxx, Barbara Walters, Opie & Anthony, Bubba the Love Sponge, The Grateful Dead, Willie Nelson, Bob Dylan, Tom Petty, and Bob Edwards. SIRIUS XM Radio is the leader in sports programming as the Official Satellite Radio Partner of the NFL, Major League Baseball, NASCAR, NBA, NHL, and PGA TOUR, and broadcasts major college sports.
SIRIUS XM Radio has arrangements with every major automaker. SIRIUS XM Radio products are available at shop.sirius.com and shop.xmradio.com, and at retail locations nationwide, including Best Buy, RadioShack, Target, Sam’s Club, and Wal-Mart.
SIRIUS XM Radio also offers SIRIUS Backseat TV, the first ever live in-vehicle rear seat entertainment featuring Nickelodeon, Disney Channel and Cartoon Network; XM NavTraffic service for GPS navigation systems delivers real-time traffic information, including accidents and road construction, for more than 80 North American markets.
About Liberty Media Corporation
Liberty Media Corporation owns interests in electronic retailing, media, communications and entertainment businesses. Those interests are attributed to three tracking stock groups:
- The Liberty Interactive group, which includes Liberty’s interests in QVC, Provide Commerce, Backcountry.com, BUYSEASONS, Bodybuilding.com, IAC/InterActiveCorp, and Expedia
- The Liberty Entertainment group, which includes Liberty’s interests in The DIRECTV Group, Inc., Starz Entertainment, FUN Technologies, Inc., GSN, LLC, WildBlue Communications, Inc., and Liberty Sports Holdings LLC
- The Liberty Capital group, which includes all businesses, assets and liabilities not attributed to the Interactive group or the Entertainment group including its subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., and TruePosition, Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation
