Sirius: Sorry, Charlie
Looks like Sirius XM can shelve that bankruptcy filing it’s been preparing these past few weeks–for the time being, anyway. This morning, the struggling satellite radio company announced an 11th-hour deal with John Malone’s Liberty Media that will allow it to meet a Feb. 17 debt deadline that might otherwise have forced the company into Chapter 11 bankruptcy protection. Under its terms, Liberty will provide Sirius (SIRI) with $530 million in loans, a portion of which will be used to repay $171.6 million of its maturing convertible notes, due today. In return, Liberty (LINTA) will receive 12.5 million shares of Sirius XM preferred stock and a couple of seats on Sirius XM’s board.
Not the greatest of terms. Still, Sirius CEO Mel Karmazin has managed to save the company from bankruptcy and from satellite mogul Charlie Ergen without accepting a change in control for the company. And the deal is not subject to the approval of the Federal Communications Commission.
“This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM,” said Sirius CEO Mel Karmazin. “By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”
At 20 cents, Sirius shares are up an astonishing 85.89 percent on news of the deal.
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