After reporting yesterday that Sirius XM was considering a bankruptcy filing, we discovered this Reuters story indicating that creditors had issued a warning to Sirius’ CEO Mel Karmazin, threatening to seek his removal if bankruptcy was chosen rather than a deal with an investor.
Still seeking to fend off a take over bid from EchoStar, Karmazin entered talks with Liberty Media Corp. This morning the two companies announced they had reached an agreement.
SIRIUS XM Radio Inc. and Liberty Media Corporation today announced that they have entered into agreements pursuant to which Liberty will invest an aggregate of $530 million in the form of loans to SIRIUS XM and its subsidiaries and receive an equity interest in SIRIUS XM.
The money will be loaned in two installments, culminating in Liberty Media Corp gaining a 40% share of Sirius XM, as well as a proportionate number of seats on the Board of Directors.
“We are excited to be investing in SIRIUS XM. We have been impressed with the company, its operations and management team,” said Greg Maffei, president and CEO of Liberty. “SIRIUS XM’s ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a "must have" service.”
This infusion of capital will allow the company to cover the debts due today and continue operations without any drastic cuts. So all the satellite radio junkies among us can now breathe easy.