Not long ago I stated that I fully expected siriusXM to issue new debt. That happened today with what was initially a $750 million offering and subsequently the amount doubled to $1.5 billion at 6% and is due in 2024. The new funds will allow the company to continue with a planned share buyback. The new debt, once in place brings the EV/EBITDA multiple up from 16.13 to 16.92 in one swoop.
The notes will be sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and outside the United States in compliance with Regulation S of the Securities Act. Much of the more recent debt sold by SiriusXm has been done off shore. These notes will bear interest at an annual rate of 6.00%. The price to investors will be 100% of the principal amount of the notes. The company will receive gross proceeds of $1.5 billion from the sale of the notes before deducting the initial purchasers’ commissions and estimated offering fees and expenses.
The company intends to use the net proceeds from the offering for general corporate purposes, which may include, from time to time and as market conditions warrant, the repurchase, redemption, defeasance, tender or repayment of its outstanding senior or subordinated indebtedness, including any borrowings outstanding under its revolving credit facility, and dividends to SiriusXM, its parent corporation, to fund share repurchases of SiriusXM’s common stock. Pending application of these amounts, the company currently expects to maintain any excess amount as cash on hand.
SiriusXM’s current debt picture now looks like this:
Essentially SiriusXM has maxed out its debt picture now if you consider full use of the credit facility. Between this new debt and cash on hand, SiriusXM has $1.6 billion in cash. Look for share purchases to ramp back up.