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This excerpt taken from the SIRI 8-K filed Jun 8, 2006. NEW
YORK –June 8, 2006 - SIRIUS Satellite
Radio (NASDAQ: SIRI) announced that it has entered into an agreement with Space
Systems/Loral, a subsidiary of Loral Space & Communications (NASDAQ: LORL),
for the design and construction of a new satellite that will be one of the most
advanced and powerful communications satellites ever built.
Construction of the satellite is expected to be completed in the fourth quarter of 2008. SIRIUS plans to launch the satellite on a Proton rocket under a contract previously announced between SIRIUS and International Launch Services (ILS). The satellite will be launched into a geostationary orbit to complement SIRIUS’ existing three satellites, which were also manufactured by Space Systems/Loral and operate in a highly elliptical geosynchronous orbit. This unique hybrid constellation will provide unparalleled redundancy, enhanced coverage and exceptional performance.
“This investment in next generation space technology will improve SIRIUS’ already exceptional service experience,” said Mel Karmazin, CEO of SIRIUS. “Not only will this satellite support our other three satellites currently in orbit, but it will also improve reception for all SIRIUS subscribers whether they are in their car, office, home or jogging in the park.”
The aggregate cost of designing, building, launching and insuring the launch of the satellite will be approximately $260 million. As part of its commitment to SIRIUS, Loral has agreed to provide a $100 million vendor financing facility. SIRIUS has no current plans to draw under the vendor financing facility.
SIRIUS continues to expect that its first quarter of positive free cash flow, after capital expenditures, could be reached as early as the fourth quarter of 2006, and that the company will be free cash flow positive, after capital expenditures, for the full-year 2007. The payments associated with the purchase and launch of this satellite were anticipated in SIRIUS’ guidance concerning free cash flow positive.
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