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XM Satellite Radio Closes $475 Million
Financing Package

WASHINGTON (January 28, 2003) – XM Satellite Radio Inc. (NASDAQ: XMSR) has received necessary consents and officially closed its $475 million financing agreement January 28. The private placement financing package consists of $225 million in new funds from strategic and financial investors and $250 million in payment deferrals and related credit facilities from General Motors. New York-based media merchant bank Veronis Suhler Stevenson, along with Merrill Lynch served as strategic advisor and private placement agent for XM. Bear Stearns served as bond advisor.

According to financing terms announced in December 2002, the $225 million in new funding is in the form of 10% Senior Secured Discount Convertible Notes due in 2009. Purchasers of these Notes include Everest Capital Limited, Eastbourne Capital Management LLC, American Honda Motor Co., BayStar Capital II, LP, The Hearst Corporation, Columbia Capital LLC, Hughes Electronics, AEA Investors Inc. and other parties. The Notes are convertible into common stock at a price of $3.18 per share. Proceeds will be used for general corporate purposes.

In the other major element of the financing package, General Motors, which is currently factory-installing XM radios in 25 different 2003 vehicle lines, has agreed to defer or finance up to $250 million of payments through 2006. The $250 million financing consists of (i) the forgiveness of approximately $115 million in fixed payments due to GM through 2006 in exchange for $89 million of 10% Senior Secured Convertible Notes due 2009, (ii) a $100 million Credit Facility due 2009 with an annual interest rate of 6 month LIBOR plus 10 percent and (iii) the right to satisfy up to $35 million of certain future payment obligations in stock (at then current market value) rather than cash. In connection with the $100 million Credit Facility, GM will receive 10 million common stock warrants at $3.18 per share. The conversion price for the GM Notes varies from $5.00 to $20.00 per share, depending upon the future price of XM stock.

In addition to the financing package, the XM announced an Exchange Offer for all $325 million of its outstanding 14% Senior Secured Notes due 2010 in exchange for New 14% Senior Secured Discount Notes due 2009, warrants and cash. The Financing Package is contingent on at least 90% of the outstanding Senior Notes participating in the Exchange Offer. The 90% participation threshold can be waived by the Company with the concurrence of two-thirds of the investors in the 10% Senior Secured Discount Convertible Notes.

“We are delighted to have assisted the company in completing this substantial financing in such a challenging market. It is a true testament to the strength of the management team and the momentum of the XM business for these new investors to join the outstanding list of key partners,” said James Rutherfurd, executive vice president and head of investment banking at Veronis Suhler Stevenson.

“We believe that with the completion of this funding package, XM's business plan will be fully-funded through cash flow breakeven,” said Hugh Panero, president and CEO of XM. “We are pleased by the strong encouragement and support from all our stakeholders and look forward to continuing XM's leadership in satellite radio, an exciting new entertainment service.”

XM added two members to its Board of Directors following the closing of the transaction. R. Steven Hicks, who brings 33 years of experience building successful companies in the radio broadcasting and media industry and Thomas G. Elliot, Executive Vice President, Automobile Operations of American Honda Motor Co.

Veronis Suhler Stevenson is a leading independent merchant bank dedicated to the media, communications and information industries. VS&A Communications Partners III, LP (Fund III) is the third private equity fund managed by Veronis Suhler Stevenson. Capitalized at $1 billion, it is one of the largest private equity funds dedicated exclusively to investments in the media, communications and information industries. Together with Fund III's predecessor funds, VS&A Communications Partners have invested in 28 platform companies across media segments and the realized and unrealized enterprise value of these investments total over $5 billion.



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