Sirius XM Improves Cash Flow – Lowers Interest
Sirius XM Radio announced today that XM Satellite Radio (a unit of the company) sold $525 million in four-year senior secured notes. The move, which dealt with more money than originally anticipated will improve cash flow, is at a lower interest rate, and does away with quarter amortization payments that the company was having to make.
The additional funds above and beyond what was announced last week will now take care of all of the Liberty Media loan to XM which was at an interest rate of 15%. The new facility improves that rate to 11.25% with a yield of 12.85%. The original $250 million that Liberty loaned to Sirius will still exist. This move cleans up the XM books moving forward and allows Sirius XM to better the overall balance sheet and improve cash flow. JP Morgan facilitated the deal.
Sirius XM stock traded higher on the news.
Position – Long Sirius XM, No Position Liberty Media
Looks like the bond market is starting to wake up again – a few months ago people were worrying about finding enough buyers, now they can find more than they need 🙂
good move that improves cash flow, lowers interest rate on existing loan, lowers stock outstanding issued originally to short the stock and Lowers Malones grasp on the company as hes paid back part of his loan to the company–This is such a big win fior the comapany and should actually get some upgrades
FWIW, this doesn’t lower any “stock outstanding”. This has nothing to do with equity. Especially equity used for hedging positions… that’s a completely different debt issue.
The problem is, too many people read Brandon’s blog — when his article that was posted for only a short while was 100% wrong. There is no equity impact by this new debt issue.
PS – For those keeping track, XM is actually paying more now in annual interest on these notes than they were paying on the notes they’re buying back. No biggie here, just a little fact. But what this move really does is free up the $275MM that XM would have had to pay out over the next 12 months — this was key in this refi.
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JP Morgan was the sole bookrunning manager for the sale.
BORROWER: XM SATELLITE RADIO INC
AMT $525.75 MLN* COUPON 11.25 PCT MATURITY 6/15/2013
TYPE SR SEC NTS ISS PRICE 95.093 FIRST PAY 12/15/2009
MOODY’S Caa1 YIELD 12.875 PCT SETTLEMENT 6/30/2009
S&P SINGLE-B SPREAD 1057 BPS PAY FREQ SEMI-ANNUAL
FITCH N/A MORE THAN TREAS NON-CALLABLE 2 YEARS**
*$499.951448 MLN PROCEEDS TO ISSUER
**CALL SCHEDULE: 106.625, 100
MAKE-WHOLE CALL 50 BPS
ok, so I missed by 25 basis points on the face rate (see below) . . .
Sirius Roadkill says:
June 23, 2009 at 1:47 pm
Agree!!
That original 15% rate was struck under extreme duress . . . plus, the company’s credit rating has improved since that loan was made as well as their amount of cash-on-hand (critical to risk premium).
They will do no worse than 11% on a refi! Quote me. Cut this out and put it under a refrigerator magnet!
One less reason to short the stock!
I can’t wait to hear what BooBoo has to say about this latest move by the management team. I’m sure he’ll spin it as another massive blunder somehow. He must have really took a beating on this stock to be so negative. 🙂
Ya, today is really pissing him off. Only thing he could say is Howard is mad at SiriusXM for how they handled Rosie. O NO!!!
Watcha wan me 2 say?
Sirius is Going Up, Up, 2 da Moon!
Watch it…Doi!!
So when is the PR announcing a michael jackson channel going out ??
Tyler, FYI… the coupon on the notes is 11.25%. You have it as 12.875%, but that is the yield. Sirius doesn’t pay that amount, they only pay the 11.25%. The yield is something completely different.
Homer….
Good catch. You are 100% correct. I have adjusted the article accordingly. Don’t know why, but the yield caught my eye when I was doing the write-up.
tyler
maybe it bettered its balance sheet but this continues to be the balance sheet of a company headed to bankruptcy or if there lucky to languish with no hope of repaying tese debts for years to come.
What the heck just happened at closing today (Friday). Down 20% at close, however after hours trading has it up 21% of close.
What is going on?
manipulation
It’s impossible to” invest” in this stock in the true sense of the word…….. It however seems to remain a ” shorter ‘s ” Paradise…… Uptik rule might help a bit , but we likely will need the dreaded RS…….as well…..!
patent lawsuit against apple/sirius xm
I looked and can only see lawsuits files in 2007. Where are you getting this?
U kidding, Right ?
Never-ending saga it wud appear……
This time it wasn’t manipulation. Today was the reconstitution of the Russell 1000 & 2000 index. The stock will no longer be included in the Russell 2000 index because it’s under $1. So all of the mutual funds that hold positions with the Russell 2000 index had to unload today. I believe the stock is going to .70 or .80 cents by the end of the year. Those averaged out under .50 cents are going to make a killing. Buy as much as you can right now!!!!
That’s not enough… and certainly not what caused the drop.
The lawsuit was filed on Thursday… besides Sirius and XM have several lawsuits pending already. Some are much bigger than this.
A 20% drop at the close like that was something else. You’ll note, the primary Defendant (Apple) closed up 1.84% yesterday.
BTW, that lawsuit was filed against Apple, primarily, and then 3 other companies. These type of infringement cases are filed all the time. If there’s any merit to the case, then a small settlement/licensing deal will be put together and the case will be dismissed. These rarely ever do go to trial.
http://www.rfcexpress.com/laws.....p?id=48236
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Of course that’s the reason, why do you think the total volume for the day was more than 430 MILLION shares traded. Almost 8 times the amount of shares traded on a daily basis. Every mutual fund that holds positions with the russell 2000 index had to unload because of the reconstitution. Read the Wall Street Journal and Barron’s. Here’s a link:
the russell was only 64 mil shares,a non event for the SP,but other outrageous amount of shares traded is a whole nother story..IMHO..
I see BooBoo is too chicken shit to post on this story. Must not have any words of wisdom based on this story. LOL!
Well Mr. Genius.
Care to explain the close at 36 cents on Friday? 😛
I think not.
You’re a boob who invests with his heart and not his head.
Sirius-XM is still headed for fatal debt spiral.
There simply isn’t enough revenue to sustain the company.
The current business model is flawed and fatally so.
Why waste your obvious analytical talents posting about this debt spiral disaster? There must be equities that are more deserving of your intellect and time…