Liberty Media Corp. will invest $530 million in financially struggling satellite radio company Sirius XM Radio Inc., the companies said Tuesday.In related news, an American satellite collided with a Russian satellite.
The investment on the first business day comes after Sirius warned it could file for bankruptcy as early as Tuesday if it cannot successfully negotiate with its debt holders.
As part of the deal, Liberty will provide a $280 million senior secured loan to Sirius, $250 million of which will be funded on Tuesday. Sirius will use the proceeds of the loan to repay $171.6 million of its maturing 2-and-a-half percent convertible notes that had been due Tuesday. The rest will be used for general corporate purposes.
The loan bears a 15 percent interest rate and matures in December 2012.
The second phase of Liberty's investment provides another loan of $150 million to Sirius's subsidiary XM Satellite Radio. Liberty has also agreed to offer to buy up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities from the lenders. [Yahoo News]