Satellite radio provider SiriusXM Radio has raised US$1bn through a senior unsecured bond offering.
The notes, which are due 2025, pay a coupon of 5.375% and priced at par. The offering was upsized by US$250m following strong demand.
The company said…
Satellite radio provider SiriusXM Radio has raised US$1bn through a senior unsecured bond offering.
The notes, which are due 2025, pay a coupon of 5.375% and priced at par. The offering was upsized by US$250m following strong demand.
The company said that net proceeds from the offering are to be used for general corporate purposes. More specifically, this is expected to be repaying the US$635m of borrowings under its US$1.25bn senior secured revolving credit facility as well as further share repurchases.
By repaying the revolver, SiriusXM can push out its debt maturities until 2020, when it has US$1.15bn of senior unsecured notes due.
Ratings agency Moody’s noted that since December 2012, the company has increased debt balances by roughly US$2.4bn. Its leverage has increased accordingly, to 3.6x debt-to-EBITDA as of 31 December 2014.
SiriusXM’s CFO David Frear has been quick to take advantage of the buoyant US high yield bond market during this time and the majority of its debt is high yield-lite with no limitations on restricted payments nor debt issuances. In addition, in November 2013, SiriusXM formed a new holding company with the potential for being an additional issuer of debt.
The main reason for the increase in debt is the company’s share buyback strategy. In the past two years, SiriusXM has made around US$4.3bn of share repurchases.
This is a reflection of the pressure that the company’s shareholders, and in particular its majority owner Liberty Media, put on SiriusXM to raise more debt in order to return cash to shareholders.
The company also expects to generate free cash flow of more than US$1.1bn over the next 12 months, which is likely to be partially distributed to shareholders, although increased capital expenditure on satellite replacements in 2016 will impact the size of the buybacks.
Top of Form
