XMSR » Topics » Refinancing transactions

This excerpt taken from the XMSR 10-K filed Mar 13, 2009.

Refinancing transactions

In connection with the Merger, we refinanced a substantial portion of our existing indebtedness:

 

   

On July 31, 2008, we issued $778,500 aggregate principal amount, net of original issue discount of $78,395, of the 13% Notes; and

 

   

On August 1, 2008, we issued $550,000 aggregate principal amount of the Exchangeable Notes.

We used the proceeds from the transactions described above to:

 

   

repurchase 99% of our 9.75% Senior Notes due 2014 at 101%, plus $18,685 in accrued interest. The tender offer for the 9.75% Senior Notes due 2014 included a consent solicitation to amend the indenture governing the 9.75% Senior Notes due 2014;

 

   

repurchase 100% of our Senior Floating Rate Notes due 2013 at par, plus $1,501 in accrued interest; and

 

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XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Dollar amounts in thousands, unless otherwise stated)

 

   

satisfy our $309,400 transponder repurchase obligation, for both debt and equity holders of a previously consolidated variable interest entity. Our debt repurchase obligation included a 1% of principal prepayment penalty as well as $6,668 in accrued interest.

In July 2008, we amended the terms of our $400,000 aggregate principal amount of 1.75% Convertible Senior Notes due 2009 to increase the interest rate from 1.75% to 10% per annum effective July 2, 2008 as part of an agreement whereby holders of the notes waived any right to seek a change of control put in connection with the Merger.

Subsequent to December 31, 2008, we and SIRIUS have entered into agreements that have had a significant impact on our debt structure as more fully described in Note 19.

This excerpt taken from the XMSR 10-Q filed Nov 12, 2008.

Refinancing transactions

In connection with the Merger, we refinanced a substantial portion of our existing indebtedness:

 

   

On July 31, 2008, we issued $778,500 aggregate principal amount, net of original issue discount of $78,395, of the 13% Notes; and

 

   

On August 1, 2008, we issued $550,000 aggregate principal amount of the Exchangeable Notes.

We used the proceeds from the transactions described above to:

 

   

repurchase 99% of its 9.75% Senior Notes due 2014 at 101%, plus $18,685 in accrued interest. The tender offer for the 9.75% Senior Notes due 2014 included a consent solicitation to amend the indenture governing the 9.75% Senior Notes due 2014;

 

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XM SATELLITE RADIO HOLDINGS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollar amounts in thousands, unless otherwise stated)

 

   

repurchase 100% of its Senior Floating Rate Notes due 2013 at par, plus $1,501 in accrued interest; and

 

   

satisfy its $309,373 transponder repurchase obligation, for both debt and equity holders of a previously consolidated variable interest entity. Our debt repurchase obligation included a 1% of principal prepayment penalty and $6,668 in accrued interest.

In July 2008, we amended the terms of its $400,000 aggregate principal amount of 1.75% Convertible Senior Notes due 2009 to increase the interest rate from 1.75% to 10% per annum effective July 2, 2008 as part of an agreement whereby holders of the notes waived any right to seek a change of control put in connection with the Merger.

This excerpt taken from the XMSR 8-K filed Jul 28, 2008.
Refinancing transactions
 
In connection with the merger, we intend to refinance a substantial portion of our existing indebtedness and raise certain additional liquidity in the manner described below, which we refer to herein (except as otherwise indicated) as the “Refinancing Transactions.” Following the merger, we would be required to offer to repurchase the following indebtedness that was outstanding at June 30, 2008 (each, a “change of control put”) unless such repurchase obligation has been waived in accordance with the terms of such indebtedness:
 
  •  $600 million aggregate principal amount of 9.75% Senior Notes due 2014 (the “9.75% Notes”);
 
  •  $200 million aggregate principal amount of Senior Floating Rate Notes due 2013 (the “Senior Floating Rate Notes”); and
 
  •  $33.2 million 10% Senior Secured Discount Convertible Notes due 2009 (the “Discount Notes”) (convertible at a price of $3.18 per XM share).


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In addition, following the merger we will be required to make an offer to repurchase the transponders of our XM-4 satellite in accordance with the terms of a sale-leaseback transaction. Assuming the merger occurred on June 30, 2008, our maximum transponder repurchase obligation of both debt and equity holders would have been approximately $309.4 million.
 
We intend to effect the refinancing of this indebtedness through the following transactions:
 
  •  the issuance and sale by us of $550 million aggregate principal amount of Notes;
 
  •  on July 24, 2008, we priced an offering of $778.5 million aggregate principal amount of 13% Senior Notes due 2014 (the “Senior Notes”). The proceeds of the offering of the Senior Notes (net of approximately 78.4 million of original issue discount) will be placed into escrow, pending completion of the merger and the consummation of the Refinancing Transactions. The Senior Notes will be guaranteed by Holdings and the same entities that will guarantee the Notes. See “Description of other indebtedness—Existing XM indebtedness—Senior Notes due 2014;”
 
  •  a cash tender offer to holders of our 9.75% Notes at par and a related consent solicitation for certain amendments to the indenture governing the 9.75% Notes (the “9.75% Offer”). Holders of a majority in aggregate principal amount of the outstanding 9.75% Notes have agreed to waive the change of control put with respect to the merger on behalf of all holders of our 9.75% Notes, subject to the consummation of the merger and the satisfaction of certain conditions in connection with the Refinancing Transactions prior to August 31, 2008;
 
  •  an offer to repurchase the Floating Rate Notes at 101% of the principal amount of such Floating Rate Notes; and
 
  •  Payment of $309.4 million for transponder repurchase obligation, for both debt and equity holders of a consolidated variable interest entity.
 
In addition, in July 2008, with the consent of holders of Holdings’ $400 million aggregate principal amount of 1.75% Convertible Senior Notes due 2009 (the “1.75% Notes”), we amended the indenture for the 1.75% Notes to increase the interest rate on the 1.75% Notes to 10% per annum (the “New Rate”), effective July 2, 2008. The indenture amendment, which is conditioned on the consummation of the merger, clarifies that the occurrence of the merger will not require us to offer to repurchase the 1.75% Notes subject to the amendment. The change in interest rate from 1.75% to 10% is expected to result in approximately $16.5 million and $30.3 million in incremental interest expense in 2008 and 2009, respectively.
 
In addition, we currently anticipate that any additional refinancing obligations, including fees and expenses, will be funded from cash on hand.
 
We do not expect to refinance the $33.2 million of Discount Notes because of the current market price of Holdings’ common stock.
 
We cannot predict the extent to which holders of our outstanding indebtedness will accept our repurchase offers, which may affect the total mix of indebtedness that remains outstanding following the Refinancing Transactions. We have assumed herein, however, that such repurchase offers are fully subscribed.
 
Except as otherwise indicated, references to pro forma indebtedness herein are presented net of original issue discount.


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