Did XM just refied 100Mil loan??

[homer985]

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

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.



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[one959]

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

Very helpfull when trying to understand such complex issues.

[Newman]

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.

[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....

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.

[homer985]

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.