Item 1.01 Entry into a Material Definitive Agreement
On May 23, 2016, our subsidiary, Sirius XM Radio Inc. (“SiriusXM”), issued $1.0 billion aggregate principal amount of 5.375%
Senior Notes due 2026 (the “Notes”). The Notes were sold to J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc.,
Goldman, Sachs & Co., SunTrust Robinson Humphrey, Inc., Wells Fargo Securities, LLC, BMO Capital Markets Corp., BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc., Mizuho Securities USA Inc., RBC Capital Markets, LLC,
Mitsubishi UFJ Securities (USA), Inc., Scotia Capital (USA) Inc. and U.S. Bancorp Investments, Inc. The Notes were resold to certain non-U.S. persons pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities
Act”), and to qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 100% of their principal amount. The terms of the Notes are governed by an Indenture, dated as of May 23, 2016, among
SiriusXM, the guarantors named therein and U.S. Bank National Association, as trustee (the “Indenture”). The following summary is not a complete description of all of the terms of the Notes.
Interest and maturity
. Interest on the Notes is payable semi-annually in arrears on January 15 and July 15 at a rate
of 5.375% per annum, commencing on January 15, 2017. The Notes will mature on July 15, 2026.
Guarantees
.
Satellite CD Radio LLC, Sirius XM Connected Vehicle Services Inc., Sirius XM Connected Vehicle Services Holdings Inc., XM eMall Inc., XM Radio LLC, XM Investment LLC and XM 1500 Eckington LLC, SiriusXM’s wholly owned subsidiaries, guarantee, on
a senior unsecured basis, SiriusXM’s obligations under the Notes, including the payment of principal and interest. These guarantors also guarantee SiriusXM’s existing senior indebtedness. One or more of SiriusXM’s other subsidiaries
may, in the future, be required to guarantee SiriusXM’s existing senior indebtedness, but may not be required to guarantee the Notes except as provided in the Indenture. Sirius XM Holdings Inc. does not guarantee the Notes.
Ranking
. The Notes are SiriusXM’s general unsecured senior obligations. The Notes and related guarantees rank equally in
right of payment with all of SiriusXM’s and the guarantors’ existing and future senior indebtedness and senior in right of payment to all of SiriusXM’s and the guarantors’ future subordinated obligations; the Notes and related
guarantees are structurally subordinated in right of payment to all existing and future liabilities (including trade payables) of SiriusXM’s non-guarantor subsidiaries; and the Notes and related guarantees are effectively subordinated to any of
SiriusXM’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.
Optional redemption
. At any time prior to July 15, 2021, SiriusXM may redeem some or all of the Notes at any time and from
time to time at a “make-whole” redemption price set forth in the Indenture. On or after July 15, 2021, SiriusXM may redeem the Notes, in whole or in part, at any time at the redemption prices set forth in the Indenture. In addition,
prior to July 15, 2019, SiriusXM may, on one or more occasions, redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at a redemption price equal to 105.375% of the principal amount of the
Notes redeemed, plus accrued and unpaid interest, if any, to but excluding the date of redemption.
Change of control and other restrictive covenants
. The Notes are subject to
covenants that, among other things, require SiriusXM to make an offer to repurchase the Notes at 101% of their principal amount in the event of a change of control and a downgrade in the ratings of the Notes, and limit SiriusXM’s ability and
the ability of SiriusXM’s subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate. In addition, the Indenture restricts SiriusXM’s non-guarantor subsidiaries’ ability to create, assume,
incur or guarantee additional indebtedness without such non-guarantor subsidiary guaranteeing the Notes on a pari passu basis. Sirius XM Holdings Inc. is not subject to these restrictive covenants.
Use of proceeds
. SiriusXM intends to use a portion of the net proceeds from this offering to repay borrowings outstanding under
its senior secured revolving credit facility. SiriusXM intends to use the remaining net proceeds from this offering for general corporate purposes, which may include, from time to time and as market conditions warrant, the repayment, repurchase,
redemption, defeasance or tender of SiriusXM’s outstanding indebtedness, including any future borrowings under SiriusXM’s senior secured revolving credit facility, dividends or loans to us to fund share repurchases of our common stock and
the payment of the cash consideration for, and fees related to, the previously announced recapitalization of Sirius XM Canada Holdings Inc. Pending application of these amounts as provided above, SiriusXM currently expects to maintain any excess
amount as cash on hand.