Sirius XM has netted US$700m from a bond offering of eight-year senior unsecured notes. Relationship bank JP Morgan was sole bookrunning manager for the sale.
The notes, which were sold by subsidiary XM Satellite Radio via a private placement to…
Sirius XM has netted US$700m from a bond offering of eight-year senior unsecured notes. Relationship bank JP Morgan was sole bookrunning manager for the sale.
The notes, which were sold by subsidiary XM Satellite Radio via a private placement to institutional investors, are non-callable for the first four years, carry a coupon of 7.625% and priced at par. The debt is rated B3 by Moody’s and B+ by Standard and Poor’s.
As with its previous bond offering back in April 2010, where it raised US$800m in five-year 8.75% senior unsecured notes, Sirius XM increased the size of the issue following strong demand. The satellite radio provider had initially planned to raise US$550m.
Proceeds from the offering, along with cash on hand, are to be used to fund the repurchase of XM’s US$525.8m outstanding 11.25% senior secured notes, due 2013. The company launched a tender offer and consent solicitation for the notes on 13 October, with JP Morgan as dealer manager and solicitation agent.
Sirius XM is offering the noteholders US$1,120 for every US$1,000 principal amount of notes validly tendered before the consent payment deadline of 26 October, while those holders who tender their notes after this date but before the offer deadline of 9 November will receive US$1,100 per US$1,000.
If successful, the planned repayment of the 11.25% senior secured notes would reduce Sirius XM’s 2013 maturities to approximately US$780m, split between 13% and 9.75% senior unsecured notes. However, if the tender offer and consent solicitation are not completed, the satellite radio provider intends to use the proceeds for general corporate purposes, which may include the repayment of other existing debt.
Sirius XM received a further fillip this week following the successful launch of XM-5 by ILS. The Space Systems Loral built bird is to be located at 85.2W and will be able to broadcast more than 130 channels.
While Sirius XM still faces a number of challenges to its business, in particular high churn, vulnerability to cyclical consumer spending and increasing competition from internet radio enabled devices, the company continues to grow its subscriber base. In the third quarter of 2010, it added 334,727 net subscribers, compared to a net subscriber gain of 102,295 in Q3 2009. For the first three quarters of this year, the company has added 1,089,417 net subscribers meaning it now has more than 19.86 million subscribers and expects to end the year with approximately 20.1 million subscribers.
