Sirius Satellite Radio has announced an agreement with holders of more than $1 billion of its debt and preferred stock, to convert all of its $700 million of debt and its $525 million of preferred stock into common stock.
The company said it also intends to raise $200 million from the sale of newly issued common stock.
Sirius said the recapitalization will dramatically reduce the company's additional funding needs.
The additional $200 million, combined with about $240 million cash currently on-hand, is expected to give Sirius sufficient cash to operate into the second quarter of 2004, based upon its current business plan. Furthermore, the company continues to evaluate initiatives that it says could enable it to achieve cash flow breakeven without raising additional funds.
"When completed, this transaction will give Sirius the strongest balance sheet in our industry and, more importantly, allow us to focus 100% of our energies on our business partners and acquiring subscribers for our premier entertainment service," said Joseph P. Clayton, president and CEO of Sirius Satellite Radio.
Oppenheimer global funds ($150 million) and affiliates of Apollo Management, LP ($25 million) and The Blackstone Group LP ($25 million) will provide the new cash infusion. Upon completion of the transaction, affiliates of Apollo Management and The Blackstone Group will exchange all of their exsting convertible preferred stock for shares of common stock and warrants to purchase common stock.
When the transaction is completed, and assuming all debt and preferred stock is converted into equity, Sirius' debt will be exchanged for 62% of the common stock, the existing preferred stock will be exchanged for 8% of the common stock, the providers of new funds will own 22% of the common stock, and the existing common stock will retain 8% of the recapitalized equity.
Existing preferred stockholders will also receive warrants to purchase 9.1% of the common stock at an average price of just under $1.
Consummation of the recapitalization is subject to a number of significant conditions, including completion of the debt exchange offer, approval of existing stockholders, regulatory approval and other customary conditions. Sirius expects to file an exchange offer and a proxy statement relating to the transaction with the Securities and Exchange Commission in the next few weeks. UBS Warburg is advising the company on the transaction.
From its three satellites orbiting directly over the U.S., Sirius broadcasts 100 channels of digital-quality radio throughout the continental United States for a monthly subscription fee of $12.95.
The company said it also intends to raise $200 million from the sale of newly issued common stock.
Sirius said the recapitalization will dramatically reduce the company's additional funding needs.
The additional $200 million, combined with about $240 million cash currently on-hand, is expected to give Sirius sufficient cash to operate into the second quarter of 2004, based upon its current business plan. Furthermore, the company continues to evaluate initiatives that it says could enable it to achieve cash flow breakeven without raising additional funds.
"When completed, this transaction will give Sirius the strongest balance sheet in our industry and, more importantly, allow us to focus 100% of our energies on our business partners and acquiring subscribers for our premier entertainment service," said Joseph P. Clayton, president and CEO of Sirius Satellite Radio.
Oppenheimer global funds ($150 million) and affiliates of Apollo Management, LP ($25 million) and The Blackstone Group LP ($25 million) will provide the new cash infusion. Upon completion of the transaction, affiliates of Apollo Management and The Blackstone Group will exchange all of their exsting convertible preferred stock for shares of common stock and warrants to purchase common stock.
When the transaction is completed, and assuming all debt and preferred stock is converted into equity, Sirius' debt will be exchanged for 62% of the common stock, the existing preferred stock will be exchanged for 8% of the common stock, the providers of new funds will own 22% of the common stock, and the existing common stock will retain 8% of the recapitalized equity.
Existing preferred stockholders will also receive warrants to purchase 9.1% of the common stock at an average price of just under $1.
Consummation of the recapitalization is subject to a number of significant conditions, including completion of the debt exchange offer, approval of existing stockholders, regulatory approval and other customary conditions. Sirius expects to file an exchange offer and a proxy statement relating to the transaction with the Securities and Exchange Commission in the next few weeks. UBS Warburg is advising the company on the transaction.
From its three satellites orbiting directly over the U.S., Sirius broadcasts 100 channels of digital-quality radio throughout the continental United States for a monthly subscription fee of $12.95.
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