XM Radio 2011 Annual Report Download - page 109

SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Liberty Media
In February, 2009, we entered into an Investment Agreement (the “Investment Agreement”) with an affiliate
of Liberty Media Corporation, Liberty Radio, LLC (collectively, “Liberty Media”). Pursuant to the Investment
Agreement, in March 2009 we issued to Liberty Radio, LLC 12,500,000 shares of our Convertible Perpetual
Preferred Stock, Series B (the “Series B Preferred Stock”), with a liquidation preference of $0.001 per share in
partial consideration for certain loan investments. Liberty Media has representatives on our board of directors.
The Series B Preferred Stock is convertible into 2,586,976,000 shares of common stock. The Investment
Agreement provides for certain standstill provisions during the three year period ending in March 2012.
We accounted for the Series B Preferred Stock by recording a $227,716 increase to additional paid-in
capital, excluding issuance costs, for the amount of allocated proceeds received and an additional $186,188
increase in paid-in capital for the beneficial conversion feature, which was immediately recognized as a charge to
retained earnings.
Liberty Media has advised us that as of December 31, 2011 and 2010, respectively, it owned the following:
December 31,
2011
December 31,
2010
8.75% Senior Notes due 2015 .................................. $150,000 $150,000
9.75% Senior Secured Notes due 2015 ........................... 50,000 50,000
13% Senior Notes due 2013 .................................... 76,000 76,000
7% Exchangeable Senior Subordinated Notes due 2014 .............. 11,000 11,000
7.625% Senior Notes due 2018 ................................. 50,000 50,000
Total principal debt .......................................... 337,000 337,000
Less: discounts ............................................ 8,212 11,093
Total carrying value debt ...................................... $328,788 $325,907
As of December 31, 2011 and 2010, we recorded $9,722 and $9,765, respectively, related to accrued interest
with Liberty Media to Related party current liabilities. We recognized Interest expense associated with debt held
by Liberty Media of $35,681, $40,169 and $79,640 for the years ended December 31, 2011, 2010 and 2009,
respectively.
Sirius XM Canada
In June 2011, Canadian Satellite Radio Holdings Inc. (“CSR”), the parent company of XM Canada, and
Sirius Canada completed a transaction to combine their operations (“the Canada Merger”). As a result of the
Canada Merger, Sirius Canada became a wholly-owned subsidiary of CSR. The combined company operates as
Sirius XM Canada. In connection with the transaction, we received:
• approximately 46,700,000 Class A shares of CSR, representing a 38.0% equity interest and a 25.0%
voting interest;
• $53,781 in cash as repayment of the XM Canada credit facility ($38,815) and consideration for our
preferred stock in Sirius Canada ($10,117 as a return of capital and $4,849 in dividends, net of foreign
withholding taxes); and
• $5,208 in non-interest bearing notes of CSR, which are primarily due at the earliest of (a) the maturity
date (2 years), (b) after Sirius XM Canada is “free cash flow” positive for a period of six consecutive
months, or (c) a date determined by the Sirius XM Canada board of directors. As of December 31, 2011,
$4,798 of these notes were reported as a Related Party current assets.
F-21