XM Satellite Radio tenders for 12% notes, 14% discount notes, floating-rate notes

By Angela McDaniels

Seattle, April 13 - XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc. have launched a tender offer and consent solicitation for their 14% senior secured discount notes due 2009, 12% senior secured notes due 2010 and senior secured floating-rate notes due 2009, according to a company news release.

XM is soliciting consents for amendments that would eliminate substantially all of the restrictive covenants in the indentures governing the notes.

The company said it will pay $1,073.75, $1,126.86 and $1,002.50 per $1,000 principal amount of the 14% notes, 12% notes and floating-rate notes, respectively.

The total consideration includes a consent payment of $3.75, $10.00 and $2.50 per $1,000 principal of the 14% notes, 12% notes and floating-rate notes, respectively, for noteholders who tender before the consent deadline.

For all notes, holders who tender will also receive accrued interest up to but excluding the payment date.

The consent solicitation will expire at 5 p.m. ET on April 26, the tender offer will expire at midnight ET on May 10, and XM expects the initial settlement date to be May 1.

Noteholders may not tender without delivering consents or vice versa.

The tender offers are subject to the satisfaction of certain conditions, including the company's receipt of valid tenders from holders of a majority of each series of notes and debt financing sufficient to consummate the tender offers.

XM said it plans to fund the tender with new issues of unsecured floating-rate and fixed-rate senior notes. It will also use proceeds form the new bonds to redeem any 14% notes and floating-rate notes not purchased in the tender offer.

D.F. King & Co. Inc. (800 859-8508 or 212 269-5550) is information agent. UBS Securities LLC (888 722-9555 x4210) and J.P. Morgan Securities Inc. (212 270-9769, call collect) are dealer managers.

The tender offer is one component of a series of refinancing transactions planned by XM in order to lower the company's ongoing interest expense, extend the maturity dates of its debt and to secure lower-cost standby liquidity.

To these ends, the Washington, D.C.-based satellite radio company said it plans to replace higher interest rate debt with new lower interest rate debt and to establish a revolving credit facility of about $230 million.

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