Liberty Media Provides $530M Investment to SIRIUS XM (SIRI)

February 17, 2009 8:01 AM EST

SIRIUS XM Radio Inc. (Nasdaq: SIRI) and Liberty Media Corporation (Nasdaq: LINTA) (LINTB, LCAPA, LCAPB, LMDIA, LMDIB) entered into agreements pursuant to which Liberty will invest an aggregate of $530 million in the form of loans to SIRIUS XM and its subsidiaries and receive an equity interest in SIRIUS XM.

Under the terms of the agreements, the investments will be funded in two separate phases.

- The first phase includes a $280 million senior secured loan from Liberty to SIRIUS XM, $250 million of which will be funded today. The proceeds of that loan will be used by SIRIUS XM to repay $171.6 million of its maturing 2 1/2% Convertible Notes due February 17, 2009, and the balance will be used for general corporate purposes, including working capital and transaction costs. The loan will bear interest at a rate of 15%, mature in December 2012, and be secured by the assets securing SIRIUS XM's existing term credit agreement.

- The second phase provides an additional loan of $150 million to XM Satellite Radio, SIRIUS XM's wholly owned subsidiary. Liberty has also agreed to offer to purchase up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities from the lenders.

Upon completion of the second phase of the Liberty investments, SIRIUS XM will issue Liberty an aggregate of 12.5 million shares of preferred stock convertible into 40% of the common stock of SIRIUS XM. In addition, Liberty will receive seats on the SIRIUS XM Board of Directors proportionate to its equity ownership.

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