Malone $500m deal for Sirius
John Maloneís Liberty Media has offered $250 million in a senior secured loan as the first step in a "multi-stage" deal to rescue Sirius XM ahead of an imminent debt deadline, the companies said in a statement.
The deal offered by Liberty involves a debt for equity swap and leaves Liberty, which controls DirecTV with a "meaningful" stake in Sirius. The $530 million transaction will occur in two phases beginning with the infusion which is part of a larger $280 million senior secured loan. That will be used for Sirius XM to repay $171.6 million of its debt now due, with the balance to cover working capital and transaction costs. The loan bears a 15 per cent interest rate that will mature in December 2012.
In the second phase of the deal Liberty will provide a $150 million loan to XM Satellite Radio and will offer to purchase up to $100 million of its outstanding loans. At that point Sirius will issue Liberty 12.5 million shares of preferred convertible stock and Liberty will take seats on the Sirius board of directors.
"We are pleased to have come to this agreement with Liberty Media, particularly in light of todayís challenging credit markets," Mel Karmazin, Siriusís chief executive said in a statement.
Libertyís offer aims to thwart the advances of Charlie Ergen, chief executive of EchoStar and Dish Communications, the US satellite broadcasters, which offered to buy Sirius last year. Ergenís offer was rebuffed but since then he has accumulated Siriusís debt and now owns a $175 million tranche that comes due on Tuesday . Sirius told investors last week it would need to file for bankruptcy protection if it could not restructure its debt by Tuesdayís deadline. The group owes $3.25 billion, with $1 billion due this year.