Sirius XM Gets $530 Million Investment From Liberty (Update1)
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By Cécile Daurat and James Callan
Feb. 17 (Bloomberg) -- Sirius XM Radio Inc., the satellite broadcaster, will receive $530 million in loans from John Malone’s Liberty Media Corp. in exchange for board seats and an equity stake, avoiding a bankruptcy filing.
Sirius XM will get $280 million in the first stage of the financing and use some of the proceeds to repay convertible bonds due today, the companies said in a statement. Liberty also agreed to offer to purchase as much as $100 million in outstanding loans and will give New York-based Sirius XM an additional loan of $150 million. The stock doubled to 21 cents in early trading.
The company, run by Mel Karmazin, said Feb. 13 it might have to file for bankruptcy as soon as today if it couldn’t reach an agreement to restructure its debt. The bonds due today are held by Charles Ergen’s EchoStar Corp., which had been buying Sirius XM debt after the broadcaster rejected its unsolicited bid, according to a person familiar with the plan.
Karmazin, 65, pitted Malone and Ergen against each other to save the company he formed seven months earlier. Malone and Ergen, both based in Englewood, Colorado, control the largest and second-largest satellite-TV broadcasters respectively and could use Sirius XM’s capacity to integrate radio and TV services, according to Fred Moran, an analyst at Stanford Group.
Over the decades, the two men have competed for customers and over acquisitions. In 2003, Ergen, 55, abandoned a bid for DirecTV Group Inc.’s then-parent company, Hughes Electronics Corp. DirecTV is now controlled by Malone, through Liberty Media.
Pay Radio
Karmazin completed the merger of Sirius and XM, the only two U.S. pay-radio providers, in July, after the credit-market crisis took hold. Sirius XM has about $3.25 billion in total debt. The stock has traded for less than $1 a share since September as investors became concerned that Karmazin wouldn’t be able to manage the debt or meet growth projections.
Malone gained control of DirecTV last year after buying out News Corp.’s stake. Rupert Murdoch’s News Corp. had bought the stake in 2003, after Ergen dropped his bid on DirecTV’s parent company because he couldn’t get regulatory approval.
Sirius XM, which lured customers with programs including talk-show host Howard Stern and the National Football League, has more than 18.9 million subscribers.
Ergen’s Dish Network Corp., separated from EchoStar last year, had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.
Email | Print | A A A
By Cécile Daurat and James Callan
Feb. 17 (Bloomberg) -- Sirius XM Radio Inc., the satellite broadcaster, will receive $530 million in loans from John Malone’s Liberty Media Corp. in exchange for board seats and an equity stake, avoiding a bankruptcy filing.
Sirius XM will get $280 million in the first stage of the financing and use some of the proceeds to repay convertible bonds due today, the companies said in a statement. Liberty also agreed to offer to purchase as much as $100 million in outstanding loans and will give New York-based Sirius XM an additional loan of $150 million. The stock doubled to 21 cents in early trading.
The company, run by Mel Karmazin, said Feb. 13 it might have to file for bankruptcy as soon as today if it couldn’t reach an agreement to restructure its debt. The bonds due today are held by Charles Ergen’s EchoStar Corp., which had been buying Sirius XM debt after the broadcaster rejected its unsolicited bid, according to a person familiar with the plan.
Karmazin, 65, pitted Malone and Ergen against each other to save the company he formed seven months earlier. Malone and Ergen, both based in Englewood, Colorado, control the largest and second-largest satellite-TV broadcasters respectively and could use Sirius XM’s capacity to integrate radio and TV services, according to Fred Moran, an analyst at Stanford Group.
Over the decades, the two men have competed for customers and over acquisitions. In 2003, Ergen, 55, abandoned a bid for DirecTV Group Inc.’s then-parent company, Hughes Electronics Corp. DirecTV is now controlled by Malone, through Liberty Media.
Pay Radio
Karmazin completed the merger of Sirius and XM, the only two U.S. pay-radio providers, in July, after the credit-market crisis took hold. Sirius XM has about $3.25 billion in total debt. The stock has traded for less than $1 a share since September as investors became concerned that Karmazin wouldn’t be able to manage the debt or meet growth projections.
Malone gained control of DirecTV last year after buying out News Corp.’s stake. Rupert Murdoch’s News Corp. had bought the stake in 2003, after Ergen dropped his bid on DirecTV’s parent company because he couldn’t get regulatory approval.
Sirius XM, which lured customers with programs including talk-show host Howard Stern and the National Football League, has more than 18.9 million subscribers.
Ergen’s Dish Network Corp., separated from EchoStar last year, had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.
