AfterDawn: News

Liberty Media rescues Sirius from bankruptcy

Liberty Media, the parent company of DirecTV, has saved Sirius XM Radio from a likely bankruptcy by announcing it will lend the struggling satellite radio company $530 million USD.

Sirius had warned that bankruptcy could come as early as today if they could not negotiate with their debt holders. The company has been in talks with Liberty for a few days now.



The company's current situation brought Sirius into a standoff with Dish Network CEO Charlie Ergen, which purchased most of the debt that was coming due today and offered to restructure the loans in exchange for a controlling stake of the company.

Liberty did note however that they will be spinning off a portion of their company into a separate, publicly traded company, and that will include the Sirius division.

The source explains that "Liberty will provide a $280 million senior secured loan to Sirius, $250 million of which will be funded on Tuesday. Sirius will use the proceeds of the loan to repay $172 million of its maturing 2.5 percent convertible notes that had been due. The rest will be used for general corporate purposes."

The loans have 15 percent interest rates and will mature at the end of 2012.

More importantly for Liberty they will receive "12.5 million shares of preferred stock convertible into 40 percent of Sirius' common shares, and two seats on the company's board."

Written by: Andre Yoskowitz @ 17 Feb 2009 22:46

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• 7 comments

• SuckRaven

  Sweet Jebus... Their stock price was up like 83% or so at its highest point today, and they were selling like hot cakes. The volume was like 200,000,000 +. Of course given the ridiculously diluted value of their stock, this makes sense.
  
  Unfortunately, I still do not think they have a viable long-term business model, but we shall see.
  
  Kinda sucks though, I could have made a pretty penny off of them by doing a bit of day trading, hehehe. Oh well....

  17.2.2009 23:53 #1

• ZippyDSM

  they need to open up their series and add more features, free streaming from the web for most consumers, alacart plans that start at 10 a month that gives you 5-10 stations to chose from which you can change online but from your S/XM radio you only get those choices.
  
  And finally they need to offer stream re broadcast to your account/radio if they had this I would get them if its offered with a basic plan for under 20$

  18.2.2009 03:21 #2

• wiseguy0

  When are we going to let businesses that don't work die?? How can we progress when we don't learn from failure?

  18.2.2009 14:20 #3

• ivymike

  "The loans have 15 percent interest rates and will mature at the end of 2012."
  
  Isn't the world supposed to end in 2012?

  19.2.2009 23:35 #4

• wdtv

  2012 true, look up planet x, it is coming.
  
  
  

  20.2.2009 10:48 #5

• Ransack

  They need to start playing more indie artists in order of generating more listeners. Major record companies already control the airwaves of major record label recording artists so Sirius radio stations should involved themselves with more indie unsigned artists in order of giving the audience a drastic difference from mainstream radio stations.

  22.2.2009 22:39 #6

• loubat

  Originally posted by ZippyDSM: they need to open up their series and add more features, free streaming from the web for most consumers, alacart plans that start at 10 a month that gives you 5-10 stations to chose from which you can change online but from your S/XM radio you only get those choices.
  
  And finally they need to offer stream re broadcast to your account/radio if they had this I would get them if its offered with a basic plan for under 20$
  I only pay $12/month for all of Sirius. All they could add IMO to make them any better would be a higher bitrate for their broadcasts.
  
  Lol, I just went to the sirius site to make sure I wasn't talking out my ass... here's what I found:
  
  Sirius Everything Plan: All of Sirius = $12.95/month
  Sirius Everything Plus Best of XM: $16.99/month
  Mostly Music plan: 65 music channels = $9.99/month
  A La Carte Plan: Pick 50 channels = $6.99/month
  
  So, they're already about 3/4 of the way to exactly what you've described. Not bad, eh?

  27.2.2009 13:27 #7