Wednesday, August 22, 2012

Sirius XM Radio Inc (NASDAQ:SIRI ) to retire debt worth $681 mln ahead of schedule

Satellite broadcaster Sirius XM Radio Inc (NASDAQ:SIRI ) said on Tuesday that, on September 20, 2012, it will redeem all of its outstanding 13 percent Senior Notes due 2013, amounting to $681.5 million.

The company is retiring the debt at least 10 months ahead of schedule.

Sirius is refinancing $400 million of the debt and using $281 million in cash to retire the remaining balance of the debt.

For the company this means that it will erase some very high interest debt and partially replace it with debt that does not mature until after the decade ends and at a very low rate of 5.25 percent.

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The move should save Sirius XM about $40 million.  It also means that the debt level of Sirius XM will now stand at $2.44 billion.

“The successful issuance of the 5.25% Notes and our strong cash position allows us to retire all of our 13% Notes more than 10 months prior to maturity,” said David Frear, Executive Vice President and Chief Financial Officer, Sirius XM in a statement.

“Following the redemption of these Notes, our next notes maturity will be on December 1, 2014," he added.

With this, the debt to operating profit margin ratio of the company would stand at 2.71 is to 1 much below its target of 3 is to 1.

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Last Friday Liberty Media Corp had said that it had raised its stake in Sirius to 48 percent by buying shares worth $234.3 million.

In 2009, Liberty had come to the rescue of Sirius, which was near bankruptcy, by advancing it $530 million in lieu of preferred stock.

Shares in Sirius rose marginally to close at $2.57.

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