SIRIUS XM Radio Announces Exchange of $172.5 Million for New Senior Secured Notes Due 2011

SIRIUS XM Radio (Nasdaq: SIRI) announced today that XM Satellite Radio Holdings Inc., its wholly-owned subsidiary, had exchanged approximately $172.5 million aggregate principal amount of its outstanding 10% Convertible Senior Notes due December 2009 for a like principal amount of its newly issued Senior Secured Notes due 2011. An aggregate of $400 million in principal amount of the 10% Convertible Senior Notes due December 2009 was outstanding prior to this transaction.

The purchasers of the new Senior Secured Notes will be paid an aggregate structuring fee of $9.45 million, $5.07 million of which was paid in cash and $4.38 million of which was paid in the form of shares of the Company's common stock based on the closing sales price of the Company's common stock on February 12, 2009, which was $0.074 per share.

The exchange of 10% Convertible Senior Notes due 2009 for new Senior Secured Notes is part of a larger restructuring effort. The Company is in discussions with others with respect to transactions that could refinance some of its and its subsidiaries' indebtedness. These transactions may not be successfully consummated. If these transactions are not consummated, it may be forced to file for bankruptcy protection as early as February 17, 2009.

This is a good sign that bankruptcy filing may not happen and is part of a greater restructuring effort. The less debt that's available for purchase for the likes of EchoStar and others the better. Approximately $227.5 million of the remaining debt due in December of 2009 is still outstanding. Sirius XM Radio's whole previous business model revolved around rolling over debt until eventual profitability. Unfortunately, the current credit crunch and financial crisis prevented that from happening properly.

Source - PR Newswire