XM AND SIRIUS TAP INTO FINANCIAL MARKETS
In busy week of developments, XM began $100 million offering in convertible notes and 5 million shares of Class A common stock. In SEC filing, XM said funds it raised through Dec. 31 would be sufficient to support operations through summer debut of commercial service. However, “substantial” additional funding may be needed if commercialization schedule is “materially delayed.” Company estimated it would need to raise additional $150-$175 million to cover funding needs through end of 2001, and additional $250-$300 million for operations through 2002. Already, XM has been beset by delay of Jan. satellite launch, which has been rescheduled for March, although company has said postponement would have little or no material effect on its financial viability.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
In SEC filing, XM said that under terms of unified standard agreement signed with Sirius year ago, each company will be entitled to license fees or credit toward mutual obligation to fund half of development cost of technologies used to develop single standard. Actual fees or credits will be based on what value particular technology brings to unified standard. If Sirius and XM fail to reach agreement, dispute may be submitted to binding arbitration.
Meanwhile, as week closed, Sirius announced it had priced public offering of common stock at level that would result in proceeds of $210 million to be used to support operations. Sirius will sell 10 million shares of common at $10 per share. At expected completion of offering March 1, Sirius, together with $150-million credit facility with Lehman Bros. signed in June, will have sufficient funds to operate through mid-2002, company said. In separate announcement, Sirius said Kenwood had become first industry vendor to ship “Sirius-ready” receivers to retail. Receivers will be available at major accounts for under $300 and await delivery this summer of FM modulators when commercial service is set to start.