In an SEC filing yesterday, it was announced that Liberty Media purchased $50 million of Sirius XM radio's latest debt offering. The company issued $257 million in senior securred notes earlier this month to pay of the $250 million Liberty Media term loan. In the offering, Liberty Media purchased $50 million of the senior secured notes which are due in 2015.
The move by Sirius XM eases cash flow issues, and paves the way for much more financially friendly terms. Prior to this offering, Sirius XM had done a $500 million dollar deal to refinance the XM debt. Liberty purchased $100 million worth in that offering.
Liberty holds preferred shares that give them a 40% stake in the company. On top of that, they hold $150 million in Sirius XM's debt. Liberty's preferred shares, which are carry voting power, their seats on the Board of Directors of Sirius XM, and their holding of debt show that Liberty is maintaining strong interest in what transpires at Sirius XM Radio.
The Liberty deal was instrumental in helping out Sirius XM's credit rating, as their stake was a clear sign to the street that Liberty would back the company up. This allowed the bonds to trade higher as the risk profile of Sirius XM became more palatable to investors. Sirius XM took things a step further by refinancing debt and getting better rates. All of these moves have boiled down to a cash flow friendly debt picture that should allow the company to get into a profitable position before much of their debt becomes due.
Clearly Liberty is heavily involved and remains interested in Sirius XM Radio. As with anything, there are pluses and minuses to a situation, but given where the company is now compared to three or four months ago, investors should be thankful that Liberty has taken such a high level of interest.
Position - Long Sirius XM, No Position Liberty