SiriusXM Announces $1.5 Billion Debt Offering to Counter Coronavirus Ad Drops

SiriusXM's Q2 2019 — 34.3 Million Subscribers and Pandora Radio's Gross Profit Climbs 40%

Satellite radio mainstay SiriusXM has announced that it will issue $1.5 billion in senior secured notes as part of an effort to offset a coronavirus-fueled drop in ad revenue.

The New York City-based company laid out the bonds’ specifics in an initial disclosure this week. As required under the Securities Act of 1933, the senior notes will be offered only to “qualified institutional buyers” — not individuals in the United States.

Along with “cash on hand,” SiriusXM stated that it will use the debt’s generated revenue to pay a previously issued round of senior secured notes, which are set to mature in 2025.

Shortly after publishing the first disclosure, SiriusXM upped the debt by $500 million, bringing the sum to a total of $1.5 billion. Additionally, the brand relayed that the notes will be due for repayment in 2030, at an annual interest rate of 4.125 percent.  That follows a similarly-gargantuan debt offering by Live Nation, which has been severely stressed by a shuttered live performance market.

This second release also indicated that SiriusXM will use the debt offering to cover the previously mentioned 2025 senior secured notes, as well as a second set of secured notes that will mature in 2023.

SiriusXM’s stock, bought and sold under the symbol SIRI, dropped slightly (about 2.4 percent) following the debt-offering announcement. At the time of this writing, the company’s shares were trading for $6.36 apiece.

In late April, we were first to report that SiriusXM had parted with 143,000 net subscribers during 2020’s first quarter, in what was otherwise an encouraging overall performance (including revenue and profit growth of six and seven percent, respectively).

Predictably, however, advertising revenue has fallen as part of the coronavirus’s overall market shakeup.

Leading concert promoter Live Nation issued $1.2 billion in debt last month, for “general corporate purposes.” The offering was initially worth $800 million, but was subsequently increased by a third.