XM ups coupon on convertibles due 2009 to 10% in lieu of exchange offer

By Susanna Moon

Chicago, July 11 - XM Satellite Radio Holdings Inc. said it amended its agreement with holders of its $400 million of 1.75% senior convertible notes due 2009 to boost the interest rate to 10% per year.

XM said the change governing the notes would be effective as of July 2, subject to completion of the proposed merger of XM with a subsidiary of Sirius Satellite Radio Inc.

Noteholders party to the amended agreement agreed not to assert any claim that the merger constitutes a fundamental change under the existing indenture, which would require an offer be made by XM to repurchase the existing notes at par within a specified period following the merger. The amendment will clarify that the merger does not constitute a fundamental change.

In light of the amendment, XM said it no longer plans to go ahead with the previously announced exchange offer.

The company said on June 27 that it reached an agreement with holders of 94.6% of the convertibles due 2009 to begin an exchange offer for the notes.

The company said it would begin the exchange offer before July 10 and issue new 10% senior convertible notes due 2009 for the existing notes.

Outside of the coupon, the new notes would have had substantially the same terms as the existing notes.

The 10% interest rate on the new notes will begin to accrue on July 2.

XM is a satellite radio services company located in Washington, D.C.

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