NEW YORK (CelebrityAccess) — SiriusXM announced plans to raise a substantial amount of capital in a bond issuance that’s tentatively scheduled for June 11.
The offering, consisting of senior notes that bear interest at an annual rate of 4.125% that will come due in 2030, with the company expecting to realize gross proceeds of $1.5 billion from the sale of the notes before deducting the initial purchasers’ commissions and estimated offering fees and expenses.
The company intends to use the net proceeds from the private offering, together with cash on hand, to redeem all of its outstanding 5.375% Senior Notes due 2025, letting them push their debt obligations further into the future, and at a slightly lower interest rate.
Unlike many companies in the entertainment sector, SiriusXM hasn’t faced immediate and direct impacts from the COVID-19 pandemic, but last month, David Frear, senior executive vp and CFO of SiriusXM that the company potentially faced turbulence in the future.
“People are not commuting as much, but as they come into the home, they’ve carried over a lot of those (listening) habits into the home,” Frear told investors during the J.P. Morgan Global Technology, Media and Communications Conference in May.
He also expressed concern over automobile sales in the future. SiriusXM installation in new cars and their attendant subscriptions are an important source of revenue for the company.
SiriusXM is owned by Liberty Media, which also owns a substantial stake in Live Nation. Earlier this year, Liberty reallocated its assets to bring the two companies closer together in its portfolio.