XM Satellite Radio has been busy over the past day or so. The company announced that they have extended their deal with Chairman Gary Parsons, borrowed $100 Million, and will commence an exchange on their 1.75% convertible notes due 2009.
Gary Parsons, the Chairman of the Board, reached an agreement with XM through November of 2009. His contract was set to expire June 30th of this year. The deal remains identical to where it was in the past in terms of salary and bonuses.
$100 MILLION BORROWED
XM announced that they have borrowed $100 Million from USB AG. A portion of the funds will be used to pay down a draw on the GM credit facility. This action gives XM Satellite Radio full access to their $150 Million credit facility. This improves the cash situation, but adds to debt. One concern the street has had was the ability to obtain financing if needed.
EXCHANGE ON 1.75% CONVERTIBLES
XM has reached agreement with 94.6% of its $400 million aggregate principal amount of 1.75% Senior Convertible Notes due 2009. XM will commence the exchange at some point before to July 10th. The interest rate on the new notes is 10% and will begin to accrue on July 2nd. Terms are said to contain substantially the same terms as the existing notes. Additionally, the noteholders have agreed that the proposed merger of XM with a subsidiary of Sirius Satellite Radio does not constitute a "Fundamental Change" under existing terms, and that the exchange offer will have a condition of the closing of the merger.
Position - Long Sirius, Long XM