John Malone's Liberty Media Corp has agreed to lend $530 million to Sirius XM Radio Inc in exchange for a 40 percent equity stake, saving the satellite radio provider from possible bankruptcy and sending its shares up 100 percent.
NEW YORK -- John Malone's Liberty Media Corp has agreed to lend $530 million to Sirius XM Radio Inc in exchange for a 40 percent equity stake, saving the satellite radio provider from possible bankruptcy and sending its shares up 100 percent.
The deal also helps Sirius Chief Executive Mel Karmazin fend off a potential takeover bid by Charles Ergen's EchoStar Corp (SATS.O), which has purchased hundreds of millions of Sirius's total debt of about $3.25 billion.
Under the agreement, Liberty would first provide a $280 million senior secured loan to Sirius XM, of which $250 million would be funded on Tuesday to help the satellite radio company repay $171.6 million in convertible notes maturing today.
Then Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM's wholly owned subsidiary, and also purchase up to $100 million of XM's credit facilities.
Once the loans are completed, Sirius XM would issue Liberty 12.5 million shares of preferred stock convertible into 40 percent of common stock.
Liberty, which owns a controlling stake in satellite TV provider DirecTV Group Inc, would also receive seats on Sirius XM's board, and expects Malone and Liberty Chief Executive Greg Maffei to join the board.
The deal comes after days of talks between the two companies as pressure mounted on Karmazin to raise funds to address some $1 billion in debt due this year.
Karmazin said in a statement that he was pleased with the agreement “particularly in light of today's challenging credit markets" and that it would enhance Sirius XM's capital structure and financial flexibility.
NEW YORK -- John Malone's Liberty Media Corp has agreed to lend $530 million to Sirius XM Radio Inc in exchange for a 40 percent equity stake, saving the satellite radio provider from possible bankruptcy and sending its shares up 100 percent.
The deal also helps Sirius Chief Executive Mel Karmazin fend off a potential takeover bid by Charles Ergen's EchoStar Corp (SATS.O), which has purchased hundreds of millions of Sirius's total debt of about $3.25 billion.
Under the agreement, Liberty would first provide a $280 million senior secured loan to Sirius XM, of which $250 million would be funded on Tuesday to help the satellite radio company repay $171.6 million in convertible notes maturing today.
Then Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM's wholly owned subsidiary, and also purchase up to $100 million of XM's credit facilities.
Once the loans are completed, Sirius XM would issue Liberty 12.5 million shares of preferred stock convertible into 40 percent of common stock.
Liberty, which owns a controlling stake in satellite TV provider DirecTV Group Inc, would also receive seats on Sirius XM's board, and expects Malone and Liberty Chief Executive Greg Maffei to join the board.
The deal comes after days of talks between the two companies as pressure mounted on Karmazin to raise funds to address some $1 billion in debt due this year.
Karmazin said in a statement that he was pleased with the agreement “particularly in light of today's challenging credit markets" and that it would enhance Sirius XM's capital structure and financial flexibility.
