XM Satellite Radio afloat with cash infusion
Source: CNN.com
XM Satellite Radio Inc. , a satellite radio broadcaster, said this week that it reached financing agreements totaling $450 million that should provide the cash needed until its operations reach break-even. XM stock jumped more than 10 percent following the news.
The Washington-based company said the package includes $200 million from a sale of notes convertible into common stock at $3.18 a share, and a small concurrent stock sale.
Also, General Motors Co. , which is installing XM radios in 25 different 2003 vehicle lines, has agreed to $250 million in payment deferrals and related credit facilities through 2006, XM said.
"With this financing package, we believe we have achieved full funding through cash flow break-even," XM President and Chief Executive Hugh Panero said in a statement Monday.
XM and rival Sirius Satellite Radio Inc. have struggled to remain viable as the market for the capital-intensive satellite radio industry ramps up.
Both XM and Sirius have lost money as they try to attract subscribers. Sirius said in November it was preparing for bankruptcy if debtholders did not approve a restructuring that included a debt-for-equity swap.
XM shares were up 39 cents, or 13 percent, at $3.39 on Nasdaq in early trade. Sirius shares were up 1 cent at 55 cents, also on Nasdaq.
