$530 million saves satellite radio company from bankruptcy
Cable giant Liberty Media reached a deal early Tuesday to invest in Sirius XM Radio in exchange for around half of the company. Sirius XM was facing bankruptcy or a hostile takeover, but will now receive $530 million in loans in exchange for an equity stake on Liberty's behalf.
According to a release from Sirius XM, the first phase of the investment will consist of a $280 million loan, $250 million of which will be funded on Tuesday. The second phase is a $150 million loan, to be aimed at the company's XM Satellite Radio subsidiary. Liberty, which owns a big stake in satellite TV provider DirecTV, will also offer to purchase up to $100 million worth of XM's outstanding loans.
Sirius XM CEO Mel Karmazin, whom a group of creditors had been threatening to oust if the company chose bankruptcy over an investment deal, will stay on.