8K Watch: The Fine Print On The Sirius-Liberty Deal

imageThe 8K on Sirius XM (NSDQ: SIRI) released this morning in conjunction with the announcement of Liberty Media’s investment offers some additional nuggets on the deal:

— The first major principal payment on the debt issued to Sirius today is due Jan. 1, 2012, which means the company has given itself three years of breathing room before it has to begin repaying the debt beyond the regular interest payments.

— The $280 million worth of loans issued today are secured by a lien on Sirius assets that include valuable properties like satellites, intellectual property, and subscription/programming contracts. So Liberty should feel fairly confident that the loan will be repaid.

— Liberty agrees it cannot own equity in Sirius in excess of 49.9 percent, which means Sirius CEO Mel Karmazin has a guarantee that Malone/Liberty will never be able to control Sirius.

— If Liberty opts to trade more than half of its preferred stock for common stock, Sirius must then get approval from Liberty if it wants to raise capital or sell the company. So, even though Malone doesn’t get operating control of Sirius, he would have a say in major corporate decisions if he converts more than half of the preferred stock issued to him.

Pictured: Sirius CEO Mel Karmazin

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