Item 1.01
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Entry into a Material Definitive Agreement
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On July 5, 2017, our subsidiary, Sirius
XM Radio Inc. (SiriusXM), issued $750 million aggregate principal amount of 3.875% Senior Notes due 2022 (the 2022 Notes) and $1.250 billion aggregate principal amount of 5.000% Senior Notes due 2027 (the 2027
Notes and together with the 2022 Notes, the Notes). The Notes were sold to J.P. Morgan Securities LLC, Barclays Capital Inc., Morgan Stanley & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BMO
Capital Markets Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc., Wells Fargo Securities, LLC, BNP Paribas Securities Corp., Credit
Agricole Securities (USA) Inc., Mizuho Securities USA LLC, 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 2022 Notes are governed by an Indenture, dated as of
July 5, 2017, among SiriusXM, the guarantors named therein and U.S. Bank National Association, as trustee (the 2022 Indenture), and the terms of the 2027 Notes are governed by an Indenture, dated as of July 5, 2017, among
SiriusXM, the guarantors named therein and U.S. Bank National Association, as trustee (the 2027 Indenture and together with the 2022 Indenture, the Indentures). The following summary is not a complete description of all of
the terms of the Indentures or the Notes and is qualified in its entirety by the copies of the Indentures which are attached as Exhibits 4.1 and 4.2 and incorporated herein by reference.
Interest and maturity
. Interest on the 2022 Notes is payable semi-annually in arrears on February 1 and August 1 at a
rate of 3.875% per annum, commencing on February 1, 2018. The 2022 Notes will mature on August 1, 2022. Interest on the 2027 Notes is payable semi-annually in arrears on February 1 and August 1 at a rate of 5.000% per
annum, commencing on February 1, 2018. The 2027 Notes will mature on August 1, 2027.
Guarantees
. SiriusXMs
wholly owned subsidiaries 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 guarantee, on a
senior unsecured basis, SiriusXMs obligations under the Notes, including the payment of principal and interest. These guarantors also guarantee SiriusXMs existing senior indebtedness. One or more of SiriusXMs other subsidiaries
may, in the future, be required to guarantee SiriusXMs existing senior indebtedness, but may not be required to guarantee the Notes except as provided in each of the Indentures. Sirius XM Holdings Inc. does not guarantee the Notes.
Ranking
. The Notes are SiriusXMs general unsecured senior obligations. The Notes and related guarantees rank equally in
right of payment with all of SiriusXMs and the guarantors existing and future senior indebtedness and senior in right of payment to all of SiriusXMs 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 SiriusXMs non-guarantor subsidiaries; and the Notes and related guarantees are effectively subordinated to any of
SiriusXMs existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.
Optional redemption for the 2022 Notes
. At any time prior to August 1, 2020,
SiriusXM may redeem some or all of the 2022 Notes at any time and from time to time at a make-whole redemption price set forth in the 2022 Indenture. On or after August 1, 2020, SiriusXM may redeem the Notes, in whole or in part, at
any time at the redemption prices set forth in the 2022 Indenture. In addition, prior to August 1, 2020, 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 103.875% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to but excluding the date of redemption.
Optional redemption for the 2027 Notes
. At any time prior to August 1, 2022, SiriusXM may redeem some or all of the 2027
Notes at any time and from time to time at a make-whole redemption price set forth in the 2027 Indenture. On or after August 1, 2022, SiriusXM may redeem the Notes, in whole or in part, at any time at the redemption prices set forth
in the 2027 Indenture. In addition, prior to August 1, 2020, 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
105.000% 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 each series of Notes at 101% of their principal amount in the event of a change of control and a downgrade in the ratings of the applicable series of Notes, and limit SiriusXMs ability and the ability of
SiriusXMs subsidiaries to create certain liens; enter into sale/leaseback transactions; and merge or consolidate. In addition, each of the Indentures restricts SiriusXMs non-guarantor subsidiaries ability to create, assume, incur
or guarantee additional indebtedness without such non-guarantor subsidiary guaranteeing the applicable series of Notes on a pari passu basis. Sirius XM Holdings Inc. is not subject to these restrictive covenants.
Use of proceeds
. SiriusXM intends to use the net proceeds from this offering, together with cash on hand, to redeem all of its
4.25% Senior Notes due 2020 (the 2020 Notes) and its 5.75% Senior Notes due 2021 (the 2021 Notes) and to repay a portion of the borrowings outstanding under its senior secured revolving credit facility. Pending application of
these amounts as provided above, SiriusXM currently expects to maintain any excess amount as cash on hand.