Satellite radio XM gets financial reprieve
According to this Wall Street Journal story (subscription required) XM has raised $450M in additional capital from investors and customers like GM, just as its rival Sirius has raised $1.2B in financing recently.
The GM piece involves several components aimed at allowing XM to conserve cash. The auto maker is installing XM radios in 25 of its 2003 vehicle lines. GM will defer $115 million in payments that it would receive from XM between 2003 and 2005 under its distribution agreement; GM will in exchange receive $89 million of 10% senior secured discount convertible notes. GM also will provide a $100 million credit facility, and XM can satisfy up to $35 million in future obligations to GM in stock rather than cash. GM will get 10 million common-stock warrants for XM at $3.18 a share.
...XM is nearing 350,000 subscribers, and hopes by the end of 2003 to have 1.2 million subscribers. Most of the cash from the new funding agreements will be used to pay for sales and marketing efforts to attract new customers.