XM Radio 2008 Annual Report Download - page 104

Refinancing of 10% Convertible Senior Notes due 2009
On February 13, 2009, we entered into a note purchase agreement with purchasers named therein (collectively,
the “Purchasers”), whereby the Purchasers exchanged $172,485 aggregate principal amount of outstanding
10% Convertible Senior Notes due 2009 (the “Old Notes”) of XM Holdings for a like principal amount XM
Holdings’ Senior PIK Secured Notes due June 2011 (the “New Notes”) in a private placement transaction pursuant
to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).
The New Notes are fully and unconditionally guaranteed by XM 1500 Eckington LLC and XM Investment
LLC (together, the “Subsidiary Guarantors”). The New Notes are secured by a first-priority lien on substantially all
of the personal and real estate property of the Subsidiary Guarantors. XM Holdings may, at its option, redeem some
or all of the New Notes at any time at 100% of the principal amount prepaid, together with accrued and unpaid
interest, if any.
We paid to the Purchasers a fee (the “Fee”) equal to, at each Purchaser’s election, either (i) 833 shares of our
common stock (the “Structuring Fee Shares”) for every $1 principal amount of Old Notes exchanged or (ii) an
amount in cash equal to $50 for every $1 principal amount of Old Notes exchanged (the “Cash Election”). The total
number of Structuring Fee Shares delivered was 59,718,519, and the aggregate cash delivered was approximately
$5,100. The Structuring Fee Shares were issued pursuant to an exemption from the registration requirements of the
Securities Act.
Investment by Liberty Media Corporation and its affiliate, Liberty Radio, LLC
Liberty Media Corporation and its affiliate, Liberty Radio, LLC, have invested an aggregate of $350,000 in the
form of loans, are committed to invest an additional $180,000 million in loans, and have received a significant
equity interest in us.
Phase One: Sirius Credit Agreement
On February 17, 2009, SIRIUS entered into a Credit Agreement (the “Sirius Credit Agreement”) with Liberty
Media Corporation, as administrative agent and collateral agent. The Sirius Credit Agreement provides for a
$250,000 term loan and $30,000 of purchase money loans. Concurrently with entering into the Sirius Credit
Agreement, SIRIUS borrowed $250,000 under the term loan facility. The proceeds of the term loan were used (i) to
repay at maturity our outstanding 21⁄2% Convertible Notes due February 17, 2009 and (ii) for general corporate
purposes, including related transaction costs.
The loans under the Sirius Credit Agreement bear interest at a rate of 15% per annum. Commencing on
March 31, 2010, the loans amortize in quarterly installments equal to: (i) 0.25% of the aggregate principal amount
of the loans outstanding on January 1, 2010 and (ii) after December 31, 2011, 25% of the aggregate principal
amount of the loans outstanding on January 1, 2012. The loan matures on December 20, 2012. We paid Liberty
Media Corporation a structuring fee of $30,000 in connection with the Sirius Credit Agreement. In addition, we will
pay a commitment fee of 2.0% per annum on the unused portion of the purchase money loan facility.
The loans under the Sirius Credit Agreement are guaranteed by Satellite CD Radio, Inc. and Sirius Asset
Management Company LLC, SIRIUS’ wholly owned subsidiaries. The loans are secured by a lien on substantially
all of SIRIUS’ assets. The affirmative covenants, negative covenants and event of default provisions in the Sirius
Credit Agreement are substantially similar to those in the Term Credit Agreement, dated as of June 20, 2007, among
SIRIUS, the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral
agent.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)