New York, New York – Liberty Media, which owns such outlets as the Discovery Channel, Starz Entertainment and Ticketmaster, will invest US$530 million in loans to Sirius XM. In return, Liberty will receive a 40% equity stake in Sirius XM, according to Automotive News.
The first phase of the funding, already partially in place, consists of a $280 million secured loan to Sirius XM, which will use it to repay $171.6 million of its maturing convertible notes, and the balance used for general purposes, including working capital and transaction costs. The second phase provides an additional loan of $150 million to XM Satellite Radio, a wholly-owned subsidiary of Sirius XM.
Liberty has also agreed to offer to purchase up to $100 million of loans outstanding to XM Satellite Radio’s existing lenders. The entertainment company will receive seats on the Sirius XM board of directors.
“We are pleased to have come to this agreement with Liberty Media, particularly in light of today’s challenging credit markets,” said Mel Karmazin, CEO of Sirius XM Radio. “Liberty’s investment is an important validation of what Sirius XM has already achieved, and a vote of confidence in what we will achieve. This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM.”