This excerpt taken from the SIRI 10-K filed Mar 10, 2009.
Our substantial indebtedness is adversely affecting us.
As of December 31, 2008, we had an aggregate principal amount of approximately $3.3 billion of indebtedness.
Our substantial indebtedness has important consequences. For example, it:
Interest costs related to our debt are substantial and, as a result, the demands on our cash resources are significant.
Our indebtedness contains covenants that, among other things, restrict our ability to incur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens, enter into transactions with affiliates, enter into sale lease-back transactions, merge or consolidate, and transfer or sell assets. Failure to comply with the covenants contained in the indentures and agreements governing this debt could result in an event of default, which, if not cured or waived, could cause us to seek the protection of the bankruptcy laws, discontinue operations or seek a purchaser for our business or assets.
XM is required to maintain a minimum cash balance of $75 million under its credit facilities, and SIRIUS is required to maintain a minimum cash balance of $35 million under those credit facilities. If XMs or SIRIUS cash balance falls below these amounts, the companies would need to obtain a waiver from the lenders to avoid a default. No assurance can be given that XM and SIRIUS would be able to obtain such a waiver or otherwise avoid a default under its credit facilities.