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Liberty Media deal staves off Sirius bankruptcy, Ergen bid

Tue, 02/17/2009 - 7:15am
The Associated Press

NEW YORK (AP) – Liberty Media Corp. will invest $530 million in Sirius XM Radio Inc., fending off a likely bankruptcy for the satellite radio company and blocking a bid by a rival, Dish Network Corp. CEO Charlie Ergen, to take control of Sirius (story here).

Sirius had warned it could file for bankruptcy as early as Tuesday if it could not successfully negotiate with its debt holders. Sirius XM Radio has 20 million subscribers who use the service to listen to sports, music and talk, including Howard Stern's show.

Ergen holds much of the batch of debt that had come due Tuesday and had offered capital infusions and a restructuring of the loans in return for control of the company. Sirius Chief Executive Mel Karmazin rejected that offer and appears to have found an alternative in time to stave off a bankruptcy filing.

As part of the deal announced Tuesday, Liberty will provide a $280 million senior secured loan to Sirius, $250 million of which will be funded on Tuesday. Sirius will use the proceeds of the loan to repay $171.6 million of its maturing 2.5 percent convertible notes that had been due. The rest will be used for general corporate purposes.

The loan from Liberty bears a 15 percent interest rate and matures in December 2012.

The second phase of Liberty's investment provides another loan of $150 million to Sirius XM. Liberty has also agreed to offer to buy up to $100 million of the loans outstanding under Sirius XM's existing credit facilities.

In exchange, Liberty will get 12.5 million shares of preferred stock convertible into 40 percent of Sirius' common shares, and two seats on the company's board. The company said it expects Liberty Chairman John Malone and President and Chief Executive Greg Maffei to join the board of Sirius.

More Broadband Direct 02/17/09:
•  After muddled process, some stations get ready to cut analog
•  Comcast Media Center bows bandwidth-planning tool
•  Comcast executives take a pass on pay raises
•  Verizon considers $5 phone plan
•  NRTC, NTCA offer rural telcos more HD channels
•  A-L program to foster innovative apps
•  Trilithic offers free training
•  Liberty Media deal staves off Sirius bankruptcy, Ergen bid
•  Mobile World Congress: What's MWC without iPhone?
•  Recession could lengthen twilight of dial-up
•  Broadband Briefs for 02/17/09

 

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