On May 12, 2016, our subsidiary, Sirius
XM Radio Inc. (“Sirius XM”), entered into an arrangement agreement (the “Arrangement Agreement”) with Sirius
XM Canada Holdings Inc. (“Sirius XM Canada”), an entity in which Sirius XM currently holds an approximate 37% economic
interest and 25% voting interest. Pursuant to the Arrangement Agreement, Sirius XM and certain Canadian shareholders will form
a new company to acquire shares of Sirius XM Canada not already owned by them pursuant to a plan of arrangement (the “Transaction”).
In connection with the Transaction, Sirius XM Canada’s shareholders will be entitled to elect to receive, for each share
of Sirius XM Canada held, C$4.50 (U.S.$3.50 as of May 12, 2016) in (i) cash, (ii) shares of our common stock, (iii) a security
exchangeable for shares of our common stock, or (iv) a combination thereof;
provided
that no more than 35.0 million shares
of our common stock will be issued in the Transaction. All of the obligations of Sirius XM under the Arrangement Agreement are
guaranteed by us.
Following the Transaction, Sirius XM is
expected to hold a 70% economic interest and 33% voting interest in Sirius XM Canada, with the remainder of the voting power and
economic interest held by Slaight Communications and Obelysk Media, two of Sirius XM Canada’s current Canadian shareholders.
Sirius XM expects to contribute to Sirius XM Canada approximately U.S.$275 million in connection with the Transaction (assuming
that all shareholders elect to receive cash in connection with the Transaction), which amount is expected to be used to pay the
cash consideration to Sirius XM Canada’s shareholders and will be decreased proportionately if shareholders elect to receive
consideration in shares of our common stock or securities exchangeable for our common stock.
The Transaction is subject to the approval
of two-thirds of the shareholders of Sirius XM Canada, as well as a majority of the minority shareholders of Sirius XM Canada.
The Transaction is also subject to receipt of court and Canadian Radio-Television and Telecommunications Commission approval. Pending
receipt of all necessary approvals, the Transaction is expected to close no later than end of the fourth quarter of 2016.
On May 13, 2016, we issued a press
release announcing the Transaction. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
This current report (including the exhibits
and attachments hereto) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to,
statements related to our expectations to complete the Transaction, expectations regarding our ownership interest in Sirius XM
Canada and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “could,” “seeks,” “projects,” “predicts,” “forecasts,”
“intends,” “plans,” “estimates,” “anticipates” or the negative version of these
words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including risks
related to
consummating the Transaction and those risks described under the section entitled “Part I — Item 1A. Risk
Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the Securities and Exchange
Commission (“SEC”), as such factors may be updated from time to time in our periodic filings with the SEC, which are
accessible on the SEC’s website at
www.sec.gov
. Accordingly, there are
or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that
are included in this current report, the exhibits and attachments hereto and in our filings with the SEC. We undertake no obligation
to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise,
except as required by law.