SiriusXM will raise $1.5 senior notes due 2030 in a sale expected to close on or around June 11, the company announced Monday (June 8).
The notes will have an annual rate of 4.125% and will be due 2030. They will pay off off two existing debts: $500 million of 4.625% senior notes that are due 2023 (at a redemption price of 100.771% plus accrued and unpaid interest) and $1 billion of 5.375% Senior Notes due 2025, (at a redemption price of 102.688% of the principal amount plus accrued and unpaid interest).
Why It Matters
—SiriusXM won’t need to worry about $1.5 billion of debt for nearly a decade. Now, its earliest due dates are August 2022 for $1 billion of notes and December 2023 for $193 million of convertible notes.
— Given the uncertainty in the U.S. economy in the coming years, later redemption dates give SiriusXM financial breathing room it may require in couple years.
What It Doesn’t Mean
—The money will not be used to fill a financial shortfall.
—The coronavirus pandemic has caused many music companies to improve their liquidity to weather the current storm. This isn’t one of those cases.
But Keep In Mind That…
–On May 13, David Frear, senior executive vp and CFO of SiriusXM, said he expects satellite subscriptions to falter in late 2020 on weak auto sales.
–On April 28, SiriusXM pulled its 2020 guidance (total revenue of approximately $8.1 billion, adjusted EBITDA of about $2.5 billion and 900,000 (net) new self-pay subscribers) and will issue new guidance when it has greater certainty of COVID-19’s impact.