Did XM just refied 100Mil loan??

Quote:

---

On June 26, 2008, XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. entered into a Credit Agreement relating to a $100 million term loan (the “Credit Agreement”) with UBS AG, Stamford Branch, as Administrative Agent and the lenders party thereto................The Credit Agreement includes market rate syndication and commitment fees, interest and expenses, and, similar to the Original Facility, has a scheduled maturity date of May 5, 2009, will survive if our pending merger with Sirius Satellite Radio is consummated, and is secured by substantially all of XM’s assets other than specified property (on a pari passu basis with the Original Facility).

---

Well if I'm reading that right, I should shut up a few critics, but since I'm no expert I'd appreciate some comments from folks that are better at deciphering these financial statements.

Sorry cant provide a link to the specific doc but from the XM wesite;

http://phx.corporate-ir.net/phoenix....922&p=irol-sec

Click on the doc for 6/26/08 then look under "Entry into a Material Definitive Agreement"

TIA

They got a $100 million loan which they used to partially repay money they had drawn on the GM credit facility. Now they have full access to that credit line again.

This is not what the press is talking about when they talk about refinancing XM's putable debt, close to $1.5 billion. But it does speak for something that anyone is willing to loan them money at this point.

Quote:

---

Originally Posted by zcurzan

This is not what the press is talking about when they talk about refinancing XM's putable debt, close to $1.5 billion. But it does speak for something that anyone is willing to loan them money at this point.

---

Agreed and thanks for the clarification. I guess at this point we are all just wishfully looking for ANY type of positive news.

Time certainly does crawl when you are refreshing headlines every 5 minutes waiting for the next big thing, either positive or negative.

I feel like I could walk away for a month and come back and still have the FCC promising action "soon".

What it does say is that XMSR is not as close to bankrupcy as many people may think.

Very good news. Looks like xm addressed the MLB credit issue and now has well over 150 million to continue operations...

I also like the fact that in this tight credit environment that xm was able to secure financing. That says a lot about the future prospects of refinancing that Goldman said couldn't be done....

Quote:

---

Originally Posted by zcurzan

I feel like I could walk away for a month and come back and still have the FCC promising action "soon".

---

Yeah I know what you mean, I just keep whistling (Sittin' On) The Dock Of The Bay by Otis Redding :(

I agree that it's a step in the right direction, good to see that not everybody has given up on these companies on account of GS.

That is what I first thought when I read it as well... now they can pay MLB :thumbup:

Quote:

---

Originally Posted by clueless

That is what I first thought when I read it as well... now they can pay MLB :thumbup:

---

XM already paid MLB the $120 million. They did it a month ago. The fact is, XM's financing can be confusing -- there are so many different aspects to it.

The escrow account has been around since XM first signed MLB. They originally funded it via a $120 million Surety Bond that expired here in June. Rather than issuing a new one so close to the merger closing, XM funded it with cash on May 16th. To come up with this cash, they borrowed the remaining $62.5 million that they had left on their $250 million revolver -- and then paid the remaining $57.5 million from their $212 million cash on hand, at the end of Q1. This left them with $154.5 million cash... plus the GM revolver, which was $150 million... or $304.5 million total.

XM then stated that they were going to borrow against the unused GM revolver during Q2, to help out.

Then today, XM announced that one of the banks that are a part of their $250 million facility, agreed to an additional $100 million Term Loan. XM stated that they used these funds to pay what they borrowed against the GM revolver. Unfortunately, we don't know how much that is yet, since Q2 numbers aren't out yet. However, given that XM's total operating cash flow draw is typically less than $30-$40 million each quarter -- it was probably not very much ($20 million, maybe?)

So doing the math, XM started the quarter with $212 million cash; plus had $62.5 million left on one facility; and another $150 million left on the GM facility... that adds up to about $425 million liquidity at the start of Q2.

They then borrowed that remaining $62.5 million facility and used $57.5 million cash to deposit into the escrow account. This left them with $305 million liquidity for the quarter.

They then got the new $100 million term loan -- thereby taking their total liquidity back up to $405 million for the quarter.

Looking back, XM's total OCF burn during Q2 last year was approximately $27 million. So depending on how much negative the OCF was during Q2 this year -- it would be deducted from the $405 million that they had available during the quarter. (Keep in mind, any draws on the GM facility are a part of OCF).

I'd guess that the FCF during Q2 (which is OCF + CapEx) was probably around ($50 million) tops... which again, includes any draws on the GM facility. So paying that off with funds from todays Term Loan -- and any other negative cash flow, will still likely leave them with over $350 million liquidity at the of Q2 here, IMHO.

Let's also keep in mind that the escrow account that XM deposited $120 million in to. When the merger is decided either way, XM plans on replacing this account with another Surety Bond or a letter of credit from MLB. This will then free back up that $120 million back to XM for operating purposes.

IMHO, XM has plenty of liquidity options at their disposal... for now... with or without the merger. But this could change. Regardless, the "demise" that has been speculated so much -- is done so by so many that don't understand their finances. Yes, they can still get new financing... and do have current financing.

If no merger, the banks that funded their revolver (which is now $350 million) that expires next year will more than likely agree to extend the term. GM's $150 million facility (that is not in use anymore) that expires next year, will more than likely agree to extend the term. That just leaves the $650 million in maturing debt next year -- this will have to be refinanced. That is the biggest financing hurdle for XM if there is no merger. I believe they can refinance it, but the terms concern me.

But if there is a merger, then XM has $1.04 billion in puttable debt, plus another $400 million in maturing debt. Then you need to add on the $300 million in maturing Sirius debt. This is nearly $1.8 million between the two, that will need to be refinanced. Other than that, I believe that XM's 2 facilities will remain intact and will likely get extended like I mentioned above.

There's a lot more going on here than just subscriber additions and net losses.



------

Are you sure that covers everything? It looks a little bit incomplete to me. Aren't you forgetting something?

:D

Quote:

---

Originally Posted by clueless

Are you sure that covers everything? It looks a little bit incomplete to me. Aren't you forgetting something?

:D

---

:googley: My head does spin when I try to put it all out there, for everyone to follow -- but I have followed their financing for several years now. It's a pain. And quite frankly, I'm not convinced of their solvency... which is why I sold 80% of my XM holdings a couple years ago. I bought a small amount back, to play the merger -- but I'm still not convinced. Neither am I of Sirius. The thing that concerns me about Sirius is their need for financing of their satellite CapEx, but that is a whole different topic.

Back to XM, while I'm not convinced of their solvency -- I also understand their burn rate vs. the amount of financing that they have available -- thus, they can last much longer than many think they can. They could go another year or two before the real panic button gets pushed. Same goes for Sirius... I do not believe that both are in as dire a position as many say they are. Not, as in... they have a few months left. But they're also not out of the woods yet.



------

homer985, thanks for taking the time to post such a detailed explanation. :thumbsup:

Very helpfull when trying to understand such complex issues.

Yes, Thank you homer.

All of the doom and gloom about about these two companies. Their cash flows are not as horid as they sound, but they are not great either.

The ONLY issue they have is the convertable debt coming due next year and CAPEX. Other than that, I think they have the cash flow to opperate nicely for at least 2 years.

If the merger passes, I think CAPEX becomes less of a worry for Sirius. They already have their current satellite paid for, and if they have already integrated the ability to transmit both signals from the newer satellites from both companies, that takes a huge amount off of the CAPEX to come.

I'm really not sure I'm a fan of this arrangement xm hammered out. It's an 11 month loan....That means it falls on sirius to repay it...:confused:

considering the apparent sale price we are getting xm for, it may be worth it...but a pop in price ends the reduction in the offer and we go back to my original point....

Senior Secured Term Loan. On June 26, 2008, XM Satellite Radio Inc. and XM Satellite Radio Holdings Inc. entered into a Credit Agreement relating to a $100 million term loan (the “Credit Agreement”) with UBS AG, Stamford Branch, as Administrative Agent and the lenders party thereto. XM used a portion of the loan proceeds to repay the previously disclosed draw under its $150 million GM credit facility. Following this repayment, XM has full access to the GM credit facility. On June 26, 2008, the lenders who are party to XM’s $250 million revolving secured facility (the “Original Facility”) entered into a Fourth Amendment to the Original Facility to approve the Credit Agreement (which replaces XM’s right under the Original Facility to elect to increase the size of the Original Facility by $100 million).

The Credit Agreement includes market rate syndication and commitment fees, interest and expenses, and, similar to the Original Facility, has a scheduled maturity date of May 5, 2009, will survive if our pending merger with Sirius Satellite Radio is consummated, and is secured by substantially all of XM’s assets other than specified property (on a pari passu basis with the Original Facility). The Credit Agreement also contains covenants, representations and events of default that are substantially similar to those under the Original Facility. In addition, the Credit Agreement, like the Original Facility, contains a financial covenant that requires XM to maintain a level of cash and cash equivalents from time to time of either $50 million or $75 million. If XM does not comply with the various covenants under the Credit Agreement, the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Credit Agreement and foreclose on the collateral.

Quote:

---

Originally Posted by crfceo

I'm really not sure I'm a fan of this arrangement xm hammered out. It's an 11 month loan....That means it falls on sirius to repay it... considering the apparent sale price we are getting xm for, it may be worth it...but a pop in price ends the reduction in the offer and we go back to my original point....

---

It's essentially an increase to the current credit facility. GS basically increased their involvement by another $100 million. It includes all the same covenants as the credit facility -- even the same maturity date. IMHO, if XM/Sirius don't complete a major refinancing of a sizeable amount of their combined debt/facilities before this expires next May... then I fully expect XM to extend the expiration date of the original facility (and this $100 million increase) out a year or two.

As for the impact on the value of the company to Sirius -- keep in mind that Sirius took out a $250 million Term Loan in June last year. They too impacted their value, with regards to the merger.