Sirius Satellite launches stock-for-debt exchange

Sirius Satellite Radio Inc. said on Thursday (Jan. 30) that it would launch an offer on Friday (Jan. 31) to exchange shares of its common stock for all of its outstanding debt, essentially on terms previously outlined, as part of a previously outlined recapitalization. Sirius said that the exchange offer and related consent solicitation would expire at 5 p.m. ET on March 4, subject to possible extension.

The company said that holders of approximately 79% in principal amount of Sirius' debt securities have already agreed to tender in the offer, under which they are to receive 779.5 shares of common stock per $1,000 of obligation (principal and accrued interest) exchanged. Completion of the exchange offer is conditioned upon, among other things, receipt of valid tenders from not less than 97% in aggregate principal amount of Sirius' outstanding debt. This minimum condition may be reduced with the consent of holders of Sirius' debt securities.

Tendering holders will also consent to the adoption of certain amendments to the indentures under which Sirius' outstanding notes were issued to eliminate substantially all of the restrictive covenants.

Concurrent with the exchange offer, the company is also soliciting votes to accept or reject a prepackaged plan of reorganization, which will attempt to accomplish the recapitalization on substantially the same terms as the out-of-court recapitalization in the event that the minimum tender condition to the exchange offer is not satisfied or waived.

Separately, Sirius announced that it has scheduled a special meeting of stockholders for 9 a.m. ET on March 4 to approve the recapitalization transactions. The Proxy Statement relating to this special meeting is being mailed to stockholders commencing Friday.

The dealer manager for the tender offer is UBS Warburg LLC. MacKenzie Partners, Inc. (call 212 929-5500) is the information agent.

AS PREVIOUSLY ANNOUNCED: Sirius Satellite Radio, a New York-based satellite radio broadcasting company, said in an S-4 filing with the Securities and Exchange Commission on Nov. 20 that it would offer to exchange new shares of common stock for existing high yield bond debt, convertible debt and bank debt, and would solicit noteholder consents tp proposed indenture changes related to its overall recapitalization plan. The company said it would additionally solicit debtholder acceptances to a proposed pre-packaged plan of reorganization - something which the company described as "a fall-back position should it fail to convert the required number of bondholders during the recapitalization process." Sirius said that if the company decided to go that route, the pre-packaged plan would effect the same transactions contemplated by the recapitalization plan, including the issuance of common stock in exchange for the company's debt securities and preferred stock, as well as proposed new equity investment.

Sirius said it would offer a total of 596,669,765 common shares (representing approximately 62% of its outstanding common stock after giving effect to the restructuring) for the debt as a part of the overall recapitalization plan. It would offer the stock in exchange for its $280.43 million (face amount at maturity) of outstanding 15% senior secured discount notes due 2007, its $200 million of outstanding 14½% senior secured notes due 2009, its $16.461 million of outstanding 8¾% convertible subordinated notes due 2009, $150 million of Lehman Senior Term Loans and $50 million of Loral Senior Term Loans.

The company said that each holder of its debt securities would receive 779.5 shares of common stock per $1,000 of principal and accrued interest exchanged. Including accrued interest through March 15, 2003, current holders of the 15% discount notes would hold 23.7% of Sirius' common stock after the completion of the recapitalization, assuming 100% participation of holders of those notes; holders of the 14½% notes would hold 18.2% of the stock; holders of the 8¾% convertible notes would hold 1.4% of the stock; holders of the Lehman loans would hold 12.6% of the stock; and holders of the Loral loans would hold 6.1% of the stock, for an aggregate of 62% of the stock which will then be outstanding.

Concurrent with the consummation of the exchange offer, Sirius' said its outstanding preferred stock would be exchanged for common stock and certain investors would purchase common stock for $200 million cash. Sirius said that the restructuring would eliminate all or substantially all of its outstanding debt and all of its preferred stock and provide the company with sufficient cash to cover its estimated funding needs into the second quarter of 2004.

In connection with the exchange offer, Sirius said it was also soliciting the consent of its noteholders to the adoption of certain amendments to the notes' indentures and the waiver of any defaults or events of default under such indentures now in existence, if any, or caused by the recapitalization plan. Consents from holders of a majority of the principal amount for each series of notes (principal amount at maturity for the discount notes) would be necessary to effect the proposed amendments and waivers.

It said that under terms of its lockup agreement, holders of approximately 53% of the outstanding principal amount at maturity of its outstanding senior secured discount notes, approximately 60% of its outstanding senior secured notes and approximately 53% of its outstanding convertible subordinated notes agreed to tender their notes in the exchange offer and consent to the proposed amendments and waivers, thereby assuring that the proposed amendments and waivers would become effective in the event the exchange offer is completed.

Sirius said that if the recapitalization plan were to be completed and supplemental indentures executed, the proposed amendments and waivers would be binding upon non-tendering holders of notes, regardless of whether such holders consented to the proposed amendments and waivers.

It said that delivery of a properly completed and validly executed letter of transmittal will constitute delivery of a consent. Holders cannot tender notes in the exchange offer unless they also consent to the proposed indenture amendments and waivers.

The company said that completion of the exchange offer would be conditioned, among other factors, upon the company's receipt of valid tenders from at least 97% in aggregate principal amount of its outstanding debt securities and 90% in aggregate principal amount of its convertible subordinated notes; provided that the holders of a majority of its debt securities might reduce the minimum tender condition to not less than 90% in aggregate principal amount of Sirius debt securities and may lower or eliminate the minimum condition applicable to its convertible subordinated notes.

Completion of the exchange offer would also be conditioned upon the approval by its existing stockholders of the restructuring and receipt of any required consents or approvals from governmental authorities.

Sirius did not initially set an expiration deadline for the exchange offer. It said that the exchange offer would begin as soon as possible after the effective date of the registration Statement filed with the SEC. It said it expects to have the restructuring and recapitalization process completed no later than March 15, 2003.

Primedia calls 10¼% '04 notes

Primedia Inc. said on Thursday (Jan. 30) that it is calling for redemption all of its outstanding 10¼% senior notes due 2004. The redemption date will be March 5, and the notes will be redeemed at par plus accrued interest. There is currently approximately $84.2 million principal amount of the 10¼% senior notes outstanding.

The company said the notes are being redeemed 15 months ahead of their maturity, which will save Primedia approximately $7 million in expected net cash interest payments. The company has no significant debt repayment obligations until 2006.

AS PREVIOUSLY ANNOUNCED: Primedia, , a New York based magazine publisher and provider of editorial content via the Internet and television, said on Oct. 31 that it had purchased $23.3 million of bonds from August through October. The bonds were bought at a discount, primarily the highest coupon 10¼% issue, and were then retired, which resulted in a gain of $3.2 million.

Primedia also said that starting last March, it had exchanged approximately $75 million of preferred stock for approximately 14 million common shares, effectively selling the common at $5.25 per share and reducing the preferred cash dividend by approximately $7 million annually.

Primus buys back $64 million high yield debt

Primus Telecommunications Group, Inc. said on Thursday (Jan. 30) that it had purchased $64.15 million principal amount of its high yield debt for $46.9 million (excluding accrued interest payments).

The McLean, Va.-based telecommunications operator said that in particular, it had bought back $43.65 million principal amount of its 11 ¾% senior notes due 2004, $18.8 million principal amount of its 9 7/8% senior notes due 2008, and $1.7 million principal amount of its 11¼% senior notes due 2009.

The repurchased debt had annual interest payments of $7.2 million, and represents $19.3 million in future cash interest savings (assuming the bonds were held to maturity). The company said that including the current purchases, it has reduced the outstanding amount of its high yield bonds to $326 million, and has purchased slightly over 50% of the outstanding bond issue that is due in August, 2004.

Primus added that the bond buyback "directly addresses the near-term liquidity issues certain investors had raised." It said that it intends to pursue additional initiatives to reduce its debt further."

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