Due to the recent merger of former satellite radio competitors Sirius and XM, and despite a recent rate hike, the newly formed Sirius XM conglomerate has a huge pile of debt and no cash on hand to pay it off. Fear not, lovers of radio from the sky, Liberty Media, owner of DirecTV satellite television, has just stepped up to the plate with a major infusion of moolah, which it will provide in exchange for 12.5 million shares of preferred stock that's convertible to a 40% equity stake in the company. A total of $530 million will be paid out by Liberty, $280 million of which will be paid immediately with a second installment of $250 million a little later down the road. A whopping $171 million of that first payment will go straight to Siruis XM's debtors.
DirecTV rival EchoStar, which owns Dish Network, was in the midst of gobbling up huge chunks of the satellite radio company's debt, prompting many to assume a takeover bid was imminent. Regardless, most analysts believe that the move by Liberty was mostly a financial decision, as Liberty will receive a 15% return on its initial $280 million investment.

[Source: Automotive News - sub. req'd]

Share This Photo X