Having moved into the black in 2010, Sirius XM is now seeking to reduce some of its hefty debt burden. The satellite radio provider has announced that subsidiary XM Satellite Radio Inc. will redeem all of its US$113.7m outstanding 10% Senior PIK Secured…
Having moved into the black in 2010, Sirius XM is now seeking to reduce some of its hefty debt burden. The satellite radio provider has announced that subsidiary XM Satellite Radio Inc. will redeem all of its US$113.7m outstanding 10% Senior PIK Secured Notes due 2011 on June 1, 2010.
“Our strong cash position, strong first quarter subscriber growth and the improving outlook for the economy have put us in position to retire these notes a year ahead of schedule,” said David Frear, executive vice president and chief financial officer of Sirius XM. “The early retirement of these notes will reduce interest expense and increase our free cash flow.”
As of December 31, 2009, Sirius XM had total net debt of US$2.799bn.
The moves comes on the back of Sirius XM finally regaining compliance with Nasdaq bid price rules, almost a year and a half after having initially breached them
The company’s share price remained above the US$1 minimum bid requirement from April 14 to April 27, the ten consecutive business days necessary to meet the stock exchange’s listing rules.
Sirius XM has always been confident of achieving this requirement despite the length of time it has breached the rules. The company’s CEO Mel Karmazin had previously pointed to the sheer size of both the company and its investor base to highlight the reason the company should remain on Nasdaq. Sirius XM has more than 3.7 billion shares of common stock available in the public float. It has an equity capitalisation of over US$5.8bn and an enterprise value of nearly US$8.8bn.
Karmazin commented: “Sirius XM is one of the most liquid securities on the Nasdaq Global Select Market; and our equity capitalisation is greater than approximately 92% of the companies listed on The Nasdaq Global Select Market.”
The company’s share price first fell foul of Nasdaq rules in October 2008, just two months after the protracted merger of Sirius and XM. Due to the credit crisis, it was given temporary suspension until Nasdaq sent its warning in September 2009 that Sirius XM had breached Nasdaq rules. The company was given 180 days, or until March 15 this year, to regain compliance.