Andre Yoskowitz
17 Feb 2009 22:46
Liberty Media, the parent company of DirecTV, has saved Sirius XM Radio from a likely bankruptcy by announcing it will lend the struggling satellite radio company $530 million USD.
Sirius had warned that bankruptcy could come as early as today if they could not negotiate with their debt holders. The company has been in talks with Liberty for a few days now.
The company's current situation brought Sirius into a standoff with Dish Network CEO Charlie Ergen, which purchased most of the debt that was coming due today and offered to restructure the loans in exchange for a controlling stake of the company.
Liberty did note however that they will be spinning off a portion of their company into a separate, publicly traded company, and that will include the Sirius division.
The source explains that "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 $172 million of its maturing 2.5 percent convertible notes that had been due. The rest will be used for general corporate purposes."
The loans have 15 percent interest rates and will mature at the end of 2012.
More importantly for Liberty they will receive "12.5 million shares of preferred stock convertible into 40 percent of Sirius' common shares, and two seats on the company's board."