Sirius XM, the largest provider of satellite radio, has struggled mightily in the months since the company was created by the merger of Sirius and XM. On the verge of bankruptcy, Sirius has been saved for the time being by Liberty Media, which has agreed to loan the company a large amount of money to prevent it from being taken over by Charles Ergen's EchoStar or forced to declare bankruptcy.
The deal loans Sirius XM $530M USD, enough to pay off its debts to EchoStar, and in exchange Liberty Media will have a 40 percent stake in the company via 12.5 million shares of preferred stock. The move will dilute the stock of current shareholders, but given the fact that its low value was largely due to the uncertainty surrounding the company, this is welcome news to many.
Sirius XM will have Liberty Media's chief executive John Malone, who brokered the deal with Sirius XM chief Mel Karmazin, on its board of directors. The company also expects to add Liberty Media's Greg Maffei to its board.
The loans issued to Sirius XM will come at a 15 percent interest rate. The deal is a significant one as it means the nation's top satellite TV provider (DirecTV, a subsidiary of Liberty Media) and its top satellite radio provider, Sirius XM, will be closely tied.
No word has been announced if the companies will plan joint packages or marketing, but given their new ties, such promotions seem likely.
quote: The UAW workers make on average $3 more per hour than the import workers. It is the retiree benefits that are killing the big 3.