won’t have to file for bankruptcy today after Liberty Media Corp. agreed to invest $530 million to rescue the satellite radio broadcaster, the companies announced Tuesday.
Engelwood-based Liberty, the media and entertainment company founded by John Malone, will immediately loan Sirius $280 million, about $171 million of which will to pay off debt Sirius had coming due this week.
A second round of $250 million from Liberty (NASDAQ: LCAPA) will also be available to Sirius XM to help it pay its debts and ward off a potential takeover of Sirius by Charlie Ergen’s Dish Network Corp., the Englewood-based satellite TV company.
In return for the investment in Sirius, Liberty Media will own 12.5 million shares of preferred stock in Sirius XM (NASDAQ: SIRI) that Liberty can convert into common stock.
That would give Liberty a 40 percent ownership stake in the radio company.
Malone and Liberty Media CEO Greg Maffei are expected to join the Sirius XM 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, in a written statement. "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."
Mel Karmazin, CEO of Sirius XM, called the deal with Liberty remarkable given today’s capital market’s, and validation of what the company envisioned when it merged the nation’s two satellite radio companies last year.
“This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM,” Karmazin said. “By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”
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